The FCC is poised to change the telecommunications industry forever! On February 18, 2026, it is expected to adopt a Notice of Proposed Rulemaking (Notice) in Docket 25-311 that would transition all remaining originating and terminating switched access charges to bill-and-keep ($0.00) in 24 months and would end the filing of access tariffs. Bill-and-keep means that carriers recover the costs of terminating long-distance calls for other carriers from their own end user customers only. Ending inter-carrier compensation charges has been an FCC goal for years, but the Commission has hesitated due to the impacts on small local exchange providers (LECs) who still receive much of their revenues through access charges.
Regardless of these concerns, the Commission states that it is time to take this action because the incentives in the current inter-carrier compensation system are hindering the development of an all Internet protocol network.
Today, we take the next step to accelerate network deployment and modernization by proposing comprehensive reform of the regulatory framework for voice telecommunications rates. The voice services market has evolved dramatically over the past several decades—shifting from switched access to Internet Protocol (IP) technologies. As a result, consumers have gained access to a wide range of competitive alternatives to traditional analog telephone services, including fixed Voice over Internet Protocol (VoIP), mobile, and satellite options. Completing the transition to IP will promote technological modernization and public safety and consumer protection benefits; enhance long-term efficiency, competition, and service quality for consumers; and lead to decreased maintenance expenses for service providers. Although IP-based technologies are widely available, some providers continue to use legacy Time-Division Multiplexing (TDM) equipment, potentially due in part to regulatory incentives embedded in the intercarrier compensation (ICC) regime, as well as the costs associated with transitioning to IP technologies. (Proposed Notice, at para. 1).
The FCC began moving switched access rates to bill-and-keep in 2011 in the so-called USF/ICC Transformation Order. At that time, terminating access charges were transitioned to bill-and-keep. This was followed in 2020 when 8YY originating end office charges were also transitioned to bill-and-keep. Now the agency is proposing a similar transition for the remaining switched access charges. Specifically, it is proposing the following transition to bill-and-keep.
As the first step the Commission proposes to immediately cap those access charges that remain uncapped, namely the intrastate originating switched access charges for rate-of-return carriers and competitive LECs (CLECs) that benchmark to rate-of-return carriers, effective 30 days after the final rules are adopted in the forthcoming order in this proceeding are published in the Federal Register.
To mitigate the potential operational disruptions an abrupt regulatory shift may cause, the agency proposes a two-year transition period for the remaining intercarrier access charges, including both intrastate and interstate access charges which had previously been capped in the USF/ICC Transformation Order, as well as transit rates and rate-of-return incumbent LECs’ originating intrastate switched access rates, which were not capped in 2011.
The transition will apply to both price cap and rate-of-return LECs as follows: a 33 percent reduction in each remaining access charge as of the first annual interstate access tariff filing following the effective date of the order in this proceeding; another 33 percent reduction by the following annual tariff filing (that would mean a total 66 percent reduction at that time from the initial rates); and a final 34 percent reduction as of the annual tariff filing following that one, thereby completing the transition to bill-and-keep, bringing all remaining access charges to zero. The same rules would apply to CLECs because of the benchmark rule.
This does leave the question about where carriers interconnect. Therefore, the Commission seeks industry comments on how to define the network edge for allocating transport cost responsibilities between carriers, both during the transition and after full IP migration when all access charges are bill-and-keep.
Regarding tariffs, the FCC proposes to maintain a role for tariffing access charges to implement the rate step down to bill-and-keep. After access charges complete the transition, it proposes to grant incumbent and competitive LECs forbearance under section 10 of the Telecommunications Act from the application of section 203 tariffing requirements for access charges. The Commission will, at that time, no longer permit any tariffs containing access charges.
The Commission proposes to defer to change-of-law provisions in existing interconnection agreement between carriers for exchange of traffic.
The Commission also proposes to eliminate ex ante pricing (i.e., establishing pricing in advance), the regulation and tariffing requirements of all end-user charges associated with interstate access offered by incumbent LECs. These end-user charges, known as Telephone Access Charges (TACs), are remnants of legacy telephone regulation when LECs were subject to comprehensive rate oversight designed to protect subscribers from supra competitive prices. These charges include the Subscriber Line Charge (SLC), the Access Recovery Charge (ARC), the Presubscribed Interexchange Carrier Charge (PICC), the Line Port Charge, and the Special Access Surcharge.
Regarding universal service contributions, the Commission proposes to adopt an interstate safe harbor during the transition of access charges to bill-and-keep allowing carriers to treat 25 percent their local voice services revenue—including revenues from local exchange service and associated access charges, but excluding bundled toll services—as assessable for contributions purposes. The Connect America Fund (CAF) used to calculate universal support for rate-of-return LECs will be transitioned as part of the switched access transition to bill-and keep.
It is clear that this proceeding will change the face of our industry. Currently, the Commission is making proposals only. It is imperative that all affected by these proposals file comments to shape the proposals in a positive way. Comments will be due 60 days after the Notice appears in the Federal Register, probably by late Spring or Early Summer. Please take the time to read the Notice carefully; it is very detailed. Here is the link – DOC-418284A1.pdf