IP: Comment on Weber ...FCC appears poised to kill reciprocal compensation

[David Farber <dave@farber.net>]

>From: Chris Savage <chris.savage@crblaw.com>
>To: "'farber@cis.upenn.edu'" <farber@cis.upenn.edu>
>
>Dave,
>
>I've been involved in this issue for the last four years.  I await with 
>interest the chance to read the FCC's actual order to see what they are 
>now doing.  But a few comments are in order.
>
>First, the issue of holding times is a red herring.  It is perfectly 
>reasonable to establish a compensation rate that has a higher initial 
>minute (to cover higher costs of setting up a call) and then a lower rate 
>for each "subsequent minute" to reflect the fact that maintaining a call 
>minute by minute is cheaper than the activity in setting it up.  This 
>treats all long calls alike -- whether to ISPs or between teenagers -- and 
>all short calls alike.
>
>Second, talking about anyone being "subsidized" by anyone else in the 
>telephone world is a lot like consultants talking about "synergistic 
>interactions of new technological business models."  Maybe there's some 
>content there, but you have to look very carefully, and ask some very 
>precise questions, to figure out what the content is.
>
>The current state of the rules is that ISPs get to buy "local" service to 
>get lines on which they can receive calls.  And people get to call their 
>ISPs on a "local" basis.  This suggests that the inter-carrier 
>compensation model applicable to "local" traffic should apply, for 
>now.  The main alternative is to treat someone connected to the network 
>like a carrier, and make them pay "access charges," which are widely 
>recognized to be overpriced.
>
>Now, the FCC is as aware as anyone that the whole regime of inter-carrier 
>compensation is messed up, on both the local and long distance side, and 
>has adopted an NPRM to try to sort it out.  That's a good thing.  But the 
>"will of the people" thus far has simply been that they be able to call 
>their ISPs as local calls, which has been the rule in the US since the 
>whole issue formally arose in the regulatory world in 1983.  That has 
>certain logical consequences when you introduce competition, as we did in 
>1996 -- including that the LEC serving the ISP get paid on the same terms 
>applicable to local calls.  That has been financially unfortunate for the 
>ILECs, which has led to the controversy.
>
>The best policy outcome here is not easy to see, particularly since it 
>depends heavily on what other, related parts of the regulations are "in 
>play."  Should dial-up ISPs pay access charges?   If so, should those 
>access charges be lowered dramatically to bring them closer to cost?  If 
>so, are the ILECs entitled to have the decreased revenues "made up" 
>somewhere else?  If so, where?  But if ISPs shouldn't pay access charges, 
>how does the carrier serving them get paid for switching incoming 
>traffic?  Etc., etc.
>
>Chris Savage
>
>
>***************************************************************************
>This electronic mail transmission may contain confidential or
>privileged information.  If you believe that you have received the
>message in error, please notify the sender by reply transmission
>and delete the message without copying or disclosing it.
>***************************************************************************



For archives see: http://www.interesting-people.org/