The FCC’s Order in FCC Docket 10-90 starts a phased – and fundamental – reform of the intercarrier compensation system which has been in place since 1982 and which defined how, and how much, telecom carriers paid for the use of each other’s networks.
Here are the key pieces you need to know about the Order:
As of the December 29, 2011, effective date of the Order, all access (for non-local calls) and reciprocal compensation (for local calls) rates are capped, except for originating intrastate access charges for rate-of-return ILECs and the CLECs who benchmark to their rates.
Over a period of 7 years for price-cap carriers (large incumbents) and 9 years for rate-of-return carriers (smaller, usually rural), the terminating access and reciprocal compensation rates will gradually be eliminated and replaced by a bill & keep process (i.e. there are no payments made between carriers).
The FCC assumes sole regulatory control over these rates, replacing a regime in which the FCC regulated interstate rates and state PUCs regulated intrastate rates.
The Order puts rules in place to end access stimulation (traffic pumping) and phantom traffic.
The Order establishes a recovery mechanism, the Access Recovery Charge (ARC), to help compensate carriers for lost revenues, and a fund to increase broadband penetration in rural areas, the Connect America Fund.
Originating access charges are not currently addressed in the Order and are the subject of an additional FCC proceeding, that will be in process in 2012.
One caveat, the Order has been appealed by several stakeholders … so any or all of the Order’s provisions are subject to change.