Industry Airs Latest Intercarrier Compensation Plan
A NARUC task force presented its proposed agreement on intercarrier compensation (ICC) reform in a closed door meeting at the FCC. Sources familiar with the presentation Wed. said the proposal would “harmonize” access charges significantly, dividing carriers into 3 groups and providing different compensation rates for large, medium and small carriers.
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A rump group in the task force presented the plan to other players during the session. NARUC hopes to have go/no go responses from all interested by March 31. The level of support of the Bells, CLECs, NASUCA, wireless carriers, consumer groups, rural carriers and others remains in doubt.
The proposal is largely a balancing act that tries to structure a settlement which most players can accept. Negotiators fell short of developing a single access charge rate for all carriers. Instead, the sources said, rates would vary by size of the carrier. The lowest rates would be the interstate termination rate for large carriers, which would likely approach reciprocal compensation. The highest would be interstate charges for small carriers.
Currently, the rates vary widely. Small ILECs typically charge 1.8 cents a min. to terminate interstate toll calls and 5.1 cents a min. for intrastate calls. Large carriers, on the other hand, by most accounts charge less than a penny a minute for interstate calls. To compensate carriers for lower returns on access charges, they would be allowed to raise subscriber line charges (SLCs). Here too, the SLC would be higher for small carriers, lower for large. Both the SLC and access charges would likely be reduced over time. The plan also addresses universal service fund reform, for the first time making implicit universal service subsidies explicit.
NARUC and Ore. Public Utility Comr. Ray Baum, chmn. of the task force, played an important role in pushing industry groups to negotiate, one industry source said. The job the group faced was huge, addressing issues of “mind boggling complexity,” the source said: “When you're talking about $10 billion there’s going to be some serious rebalancing. It’s got to be…. But if not this, what? Are you going to leave this up to the feds or the state regulators.”
After years of false starts, the industry is eager to find a solution. “People are tired and people want solutions,” the source added: “We don’t even know who can support it. What I do know is it’s the best plan that a bunch of people who are really knowledgeable experts in their field can put together, and everyone will have to decide whether it’s a plan they can go forward with.”
Another industry source said addressing USF is critical. “Can the FCC tackle this issue with people who are going to be in 95 different camps?” he asked. “Politically it’s very hard, but if [regulators] don’t do it, they're going to have a major catastrophe on their hands.” The source said he expected significant resistance from companies comfortable with the current ICC regime, fearful they will take a financial hit if rates are rebalanced.
The goal of the task force is to “harmonize” access charge rates as much as possible, a 3rd industry source said. “All the haggling has been over the details,” the source said. “When you've got all these different rates there’s all sorts of room for people to play games and then you add into it VoIP and phantom traffic and it’s a real mess.”