Intercarrier Compensation Debate Flares in Virtual NXX Rulemaking
Incumbent and competitive carriers split on whether access charges should apply to virtual NXX calls, a subset issue to the intercarrier compensation debate. In comments last week on a petition by Blue Casa Communications, most incumbents said access charges should apply. Competitors defended the existing practice of applying reciprocal compensation.
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A virtual NXX call is a locally dialed call between callers in different calling areas. This might occur if, for example, a VoIP caller from California used a phone number with a Pennsylvania area code and exchange to call someone living in that same Pennsylvania exchange. Since the area codes and exchanges are the same, such calls are usually treated as local and subject to reciprocal compensation. Blue Casa wants the FCC to rule that virtual NXX calls aren’t local, because the calling parties aren’t actually located in the same exchange.
Virtual NXX calls may include identical exchange codes, but they aren’t local because the calling parties’ actual locations are far apart, said a coalition of incumbent local exchange carrier associations. The joint comments were signed by USTelecom, the Independent Telephone & Telecommunications Alliance, the National Exchange Carrier Association, the National Telecommunications Cooperative Alliance, the Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies. Virtual NXX calls incur “essentially the same costs” as long-distance calls, but are frequently compensated as if they were local, the group said. As a result, virtual NXX carriers and ISP customers get a “free ride” at rural customers’ expense, it said.
Virtual NXX calls “are identical to any other type of local call” from the calling party’s perspective, disagreed NuVox, One Communications and M5 Networks in joint comments. “There is no reason to depart from traditional industry practice or the definitions in the [Communications] Act and the Commission’s rules simply to impose originating access charges on such calls.”
Blue Casa asked the FCC to apply pre-Telecom Act rules to “traffic patterns created by virtue of the 1996 Act,” said Level 3. “Blue Casa’s position requires suspending the regulatory reality of the Telecom Act and importing irrelevant rules from an era during which” Blue Casa would not “have been able to operate as a competitive provider.” Last year’s ISP remand decision left “no doubt” that ISP- bound calls are subject to reciprocal compensation, said Level 3.
Sprint Nextel agreed with the competitive local exchange carriers, saying the FCC “has explicitly and repeatedly determined that ISP-bound calls are subject to a capped intercarrier compensation rate.” Core Communications, an ISP with ongoing litigation about ISP-bound traffic compensation, also concurred. “The petition is completely detached” from FCC and court precedent on reciprocal compensation, “as if filed by a carrier that, like Rumpelstiltskin, has slept through the last ten years,” Core said.
Verizon took no side, urging the agency to focus instead on a more comprehensive revamp for intercarrier compensation. The virtual NXX matter isn’t pressing, because carriers are able to address the issue through interconnection agreements, the company said. If the commission does tackle the issue, Verizon said it should only rule prospectively, so as not to “disturb the contractual arrangements that carriers have entered into over the past seven years.”