IP: FCC sets new Internet carrier payment policy

[David Farber <dave@farber.net>]

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>FCC sets new Internet carrier payment policy
>
>Janos Gereben - www.the451.com
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>
>
>[Government revamps rate arrangements between incumbent and competitive
>local exchange carriers in US public switched telephone network.]
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>
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>In a long awaited decision, the Federal Communications Commission voted 3-1
>to reduce significantly carrier-to-carrier payments between incumbent local
>exchange carriers (ILEC) such as Bell Atlantic and SBC, and competitive
>local exchange carriers (CLEC) - companies acting as retail Internet service
>providers.
>
>
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>FCC chairman Michael Powell, commissioners Susan Ness and Gloria Tristani
>voted in favor, Harold Furchtgott-Roth against the new regulations. Powell
>said the matter of "disparate compensation arrangements between carriers and
>other companies for traffic that traverses the public switched telephone
>network" is of great importance to the regulatory process and to nation's
>network.
>
>
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>In a related matter, more obviously important to users, the FCC indicated
>that it will soon conclude its CLEC access-charges proceeding. Powell
>referred to "the soon-to-be-adopted Order regarding how much CLECs can
>tariff and charge long distance companies in access charges."
>
>
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>The Commission also announced that telecommunications delivered to ISPs is
>interstate-access traffic, specifically "information access," and it will
>not be subject to reciprocal compensation. Ness said the Commission
>decisions have modified rate structures so that "payments more accurately
>reflect costs and the manner in which those costs are incurred." The FCC's
>goal, she said, "has been to reduce distortions in the marketplace that
>serve as impediments to competition." In opposition, Furchtgott-Roth called
>the decision "sad and shameful." The FCC is "telling private parties that
>Washington knows how to improve their lot better than they do themselves,"
>the Republican commissioner said. "We would be mandating an invasive form of
>nationwide price regulation, a great irony at a time when politicians of all
>stripes embraces the ideals of economic deregulation."
>
>
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>Recovery of costs for originating and terminating telecommunications traffic
>delivered to ISPs has been a complex and hit-and-miss affair, characterized
>by the Commission ruling as "creating opportunities for regulatory arbitrage
>and distorted market incentives."
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>The new rates for inter-carrier compensation of ISP-bound traffic will be
>capped at 0.15 cents ($.0015) per minute-of-use (MOU) for the next six
>months, reduced to 0.10 cents MOU for the following 18 months, and 0.07
>cents MOU after that. These amounts may appear miniscule, but multiplied by
>the millions of MOUs daily, they add up to a pretty penny. There is also a
>complex set of rules and exceptions going with the new rates, available at
>http://www.fcc.gov/Bureaus/Common_Carrier/News_Releases/2001/nrcc0114.html.
>
>
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>The FCC decision comes a year after the US Court of Appeals for the District
>of Columbia Circuit vacated the Commission's previous declaratory ruling in
>the matter "for want of reasoned decision-making." It is possible that the
>courts may have role in deciding the case of "Intercarrier Compensation for
>ISP-Bound Traffic," but the Commission staff is likely to have considered
>the facts very closely to avoid the charge of "want of reasoned
>decision-making" again.
>
>
>
>==================
>Janos Gereben/SF, CA
>janos451@earthlink.net



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