FCC Won't Challenge States On Compensation
13 Nov 1998, 11:39 AM CST
By Robert MacMillan, Newsbytes.
ORLANDO, FLORIDA, U.S.A.,
States' decisions to prolong agreements between local telephone service providers to compensate each other for telephone calls made to each others networks will not be reversed on the federal level, Federal Communications Commission (FCC) Chairman William Kennard told a telecommunications convention audience earlier this week.
Speaking to the National Association of Regulatory Utilities Commissioners (NARUC) at its convention in Orlando, Fla., Kennard said state decisions to allow the practice of reciprocal compensation between local phone providers will be allowed to stand, in spite of the FCC's consideration to change these rules at the federal level.
Twenty-three states have allowed reciprocal compensation agreements between ILECs (incumbent local exchange providers, such as the baby Bell companies) and CLECs (competitive local exchange providers, or new local phone service providers that have sprung up since the passage of the Telecommunications Act of 1996).
Reciprocal compensation refers to the payment a local phone provider makes, regardless of whether it is a CLEC or an ILEC, when one of its customers calls a local telephone line that is owned by another local phone provider. The local carrier whose customer makes the call pays the money to the local carrier that completes the call.
"I know that a large number of states have already weighed in on the issue of reciprocal compensation between local carriers handling Internet traffic," Kennard said. "I believe that those states have been right to decide that issue when it has been presented to them, and I do not believe that it is the role of the FCC to interfere with those states in any way. Parties should be held to the terms of their agreements, and if a state has decided that a reciprocal compensation agreement provides for the payment of compensation for Internet-bound traffic, then that agreement and that decision by the state must be honored."
Originally pressed for by the baby Bell companies after the Telecom Act's passage, reciprocal compensation has quickly become a serious problem for these ILECs, because many CLECs are in the business of Internet access. These newer phone companies exist largely to provide lines to Internet service providers (ISP) for use in their dial-up modem banks. Since modem banks only receive calls, and do not originate them, the baby Bells have found that as Internet usage on the part of their customers has increased, they have been forced to pay out large sums of money to the CLECs.
So far, many of the ILECs have refused to pay the reciprocal compensation fees, and have promised that if the FCC changes the reciprocal compensation rules, they will not be liable for the payments.
The FCC's commissioners currently are considering new rules that reclassify Internet access calls as long distance calls, and are therefore not subject to reciprocal compensation, and subject to direct FCC regulation.
For the 23 states that have allowed reciprocal compensation agreements to stand, most of these agreements were made on a contract basis, meaning the deals will expire at a certain time. At that time, barring further legal action to extend the contracts, even those states' Internet access calls will be subject to long distance regulations from the FCC, should the agency decide to treat the access calls as such.
The FCC has not yet decided whether to change the status of Internet access calls, and is expected to arrive at a decision as early as today, but more likely during the next week.
Kennard said that long distance status for Internet access calls will not result automatically in heavy-duty rulemaking for the Internet.
"We are not talking about regulating the Internet," he said. "The issue is access to the Internet over the public switched network. And the issue of reciprocal compensation is about inter-carrier compensation for calls that are delivered to the Internet. These are among the many issues we will face in this new world where the public switched network intersects with the Internet."
Representatives from some long distance providers have told Newsbytes that it is unclear whether the FCC will impose long distance-style fees on Internet access calls if it changes the Internet access rules, though Kennard has stressed that this will not happen.
"We should promote certainty and stability, growth and innovation," Kennard said. "We...have sought to further these goals by, among other things, exempting the Internet from per-minute access charges.
"For reasons that escape me, there are those who regularly suggest that the FCC is considering the imposition of per-minute charges on Internet providers," he added. "The forces behind these rumors are doing a disservice to the American consumer, because in fact nothing could be further from the truth."
Kennard also addressed the issue of slamming, the illegal practice of a long distance provider switching a customer's chosen long distance service without the customer's knowledge or consent.
Slamming currently is outlawed, but Congress, especially House Commerce Committee Chairman Thomas Bliley, R-Va., has expressed dismay at the lack of effective enforcement of anti-slamming rules. While slamming legislation in the past Congress has run into roadblocks, many Congress members have urged the FCC to be more vigilant in anti-slamming efforts.
Kennard said the FCC is doing as much as it can. "We at the FCC have been vigorously prosecuting slammers, imposing million dollar-plus fines for the most egregious conduct," he said.
He also said the FCC is working to promote "truth-in-billing" on customers' telephone bills. "Consumer bills should be easy to understand," said Kennard. "They should describe the services for which the customer is being billed, and they should provide a point of contact for inquiries and complaints. And a consumer bill should clearly highlight any new charges that have not previously appeared on a bill."
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