Industry Expects FCC Action on ‘Traffic Pumping’
The FCC may soon take a renewed look at the legality of traffic stimulation that rural local exchange carriers are accused of carrying out through arrangements with free- conferencing providers, industry officials said in interviews. They said two recent events have raised the profile at the FCC of what big carriers call traffic pumping: An Iowa Utilities Board decision last month requiring eight rural LECs to refund unauthorized intrastate switched access charges billed to Qwest, AT&T and Sprint, and an AT&T letter saying Google Voice is flouting an FCC ban on traditional telco “self-help” by blocking calls to numbers with high access charges (CD Oct 2 p13).
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Traffic pumping probably will get attention at the FCC because aides consider the matter important and the Iowa Utilities Board decision has made it significantly more prominent, USTelecom Vice President Glenn Reynolds said. The decision provides considerable evidence that rural carriers are taking part in an illegal scheme, he said. With the broadband plan taking much of the commission’s time, it’s tough to get anything on the FCC’s agenda, but Reynolds said he’s hopeful that traffic pumping is now high-profile enough to bring an FCC ruling ahead of the national broadband plan and a long-awaited intercarrier compensation overhaul.
The FCC showed interest in the issue by circulating an order last month (CD Sept 29 p6) on a dispute between Qwest and Farmers and Merchants Mutual Telephone Company, one of the companies that the Iowa board ruled against, said Ross Buntrock, an Arent Fox attorney representing the RLECs at the FCC. The FCC is likely interested in the decision because the board didn’t defer to any FCC decision and “completely overstepped its authority,” he said.
FCC Chairman Julius Genachowski believes that it has a duty to tackle the “complex and important issue” of revamping intercarrier compensation, a commission spokesman said. The chairman also believes that an overhaul of intercarrier compensation is inseparably bound up with one of universal service, and he wants the FCC to pay early and careful attention to both, he said.
The Iowa order may be the “biggest catalyst” for FCC action, because it “makes clear that this is not a two-sided, nuanced debate but a very explicit, no-holds-barred scheme to game the system,” said CEO David Frankel of ZipDX. That’s an audio conferencing company that charges for its services and competes with companies like FreeConferenceCall. “Even if I try to set aside my own interests and look at it objectively, I still believe [the Iowa order] says that these guys, while smart, are contributing no net positive value to the universe and are not particularly upstanding businesspeople.” Frankel met with Wireline Bureau staff last month, he said, and got the sense they are “ready” to work on the issue but are “waiting for somebody on the eighth floor to give them the nod to proceed.”
Call blocking by VoIP providers is another growing pressure point that could prompt a ruling on traffic pumping, said Public Knowledge Legal Director Harold Feld. After AT&T’s letter, an VoIP company called Speakeasy started blocking calls, too, he said. Though traffic pumping has been considered in the broader context of intercarrier compensation, it would be easy for the FCC to tackle the matter separately, he said. The commission wouldn’t “have to solve intercarrier compensation to decide” that traffic pumping is “abusive,” Feld said.
AT&T’s letter about Google Voice highlights traffic pumping problems, but it won’t be as important a spur to action as the Iowa decision, Reynolds said. The letter’s main purpose is to show that FCC rules are unclear on whether VoIP providers like Google Voice should fall under the same regulations as traditional telcos, he said.
The Google call-blocking policy shows that intercarrier compensation reform is needed ahead of net neutrality regulation, Free State Foundation President Randolph May wrote Friday. Even Google has said intercarrier compensation is “badly flawed,” he said. The FCC has claimed to make revamp of the rules a priority for a decade, he said, but failure to act “has impaired sustainable facilities-based competition, retarded new investment, and impeded the development of new technologies.”
Independent Telephone & Telecommunications Alliance President Curt Stamp said he’s doubts that the FCC will push forward on traffic pumping while it has a national broadband plan to worry about. He expects that the RLEC petition to preempt the Iowa order will result in only “partial” action on the issue by the FCC. And AT&T’s letter about Google is just a letter, so it doesn’t force the FCC to act, he said. Broader rules are more likely to come in the agency’s long- pending overhaul for intercarrier compensation, and that probably won’t happen until after February, he said. Revamping that system is likely to get at least a mention in the broadband plan, since the FCC must identify ways to pay for broadband, Stamp said.
Meanwhile, Speakeasy spoke out on its new policy to block calls to numbers with high access charges (CD Oct 2 p12). The company “made this decision in the best interest of our customers in order to protect them from abusive, high- cost providers,” Marketing Manager Amanda Hoffman said. Speakeasy notified customers by e-mail Tuesday and told upset customers to call the company’s 800 number, Hoffman said.