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March 02, 2005

Coming Down to the Wire: Level 3 Forbearance Petition on the Application of Access Charges to IP-to-PSTN traffic:

Late last year I blogged my predictions for 2005. Number 1 on my list was that 2005 would be the year VoIP in the USA crosses the "early-adopter chasm." The FCC has before it, a vehicle that will help us continue rapidly down the road to the day that all American consumers have access to the innovative features that VoIP promises. Unfortunately, the FCC is dangerously close to slamming the door on the visionaries and innovators who have driven the VoIP industry forward. The FCC needs to hear from you....NOW. On or before March 22, the FCC is required by law to act on a request filed by Level 3. If the FCC grants Level 3's request, VoIP providers will continue to have the same access to the PSTN at the same cost-based rates that they have always had under the ESP exemption. If the FCC denies Level 3's request, VoIP providers, and worse, their customers, will be forced by incumbent carriers to pay significantly higher rates. These rates, known to the carrier world as access charges, not only cover the cost of providing access to the local network, but also include significant subsidies.

So why should the FCC permit incumbent LECs to impose these subsidy-laden rates on IP-PSTN traffic? Isn't that what the universal service fund was created for? The entire communications industry is in agreement that the current system of carrier-to-carrier compensation is broken. We are all looking for a rational solution to comprehensive compensation reform. There is no logical reason to move IP-PSTN traffic from a system of cost-based access (based on the ESP exemption) to a system of access charges, only to turn around and reform this broken system back to something more reflective of cost --- something similar to reciprocal compensation payments. Moreover, while some opposing the petition have claimed that the request by Level 3 is simply a scam to reduce their own access costs while continuing to charge access for the very same traffic when it terminates on the Level 3 network, Level 3 has publicly stated, on multiple occasions that this argument is simply without merit. In Level 3's words: "Level 3 will collect reciprocal compensation for IP-PSTN traffic it terminates, and it will pay reciprocal compensation for IP-PSTN traffic it originates. It will not pay or collect access charges for any IP-PSTN traffic." This symmetry rule is critical to creating and maintaining a level playing field. The Commission should ensure that ILECs as well as all similarly situated CLECs are prohibited from unilaterally changing the rules and imposing access charges on IP-PSTN traffic.

I must confess that I had some misgivings about the Level 3 Petition when I thought there was a way in which Level 3 could use a grant of the Petition as a vehicle to execute an arbitrage play -- pay lower recip comp rates to LECs while charging higher access rates to other interconnecting carriers. I have been assured that Level 3 will not do so. If Level 3 finds a way to turn around and charge access for the same service for which it only pays recip comp, I would equally challenge such hypocrisy.

The bottom line is that the intercarrier comp regime is so screwed up, anything that forces all sides to sit down to negotiate a more sensible regime, such as bill-and-keep or peering-type arrangements, is a good thing in my mind. All I know is that, if grant of the Level 3 Petition brings us any closer to resolution or, at least, does not drag the IP Industry into the regulatory quagmire, it would be a good thing.

But you must act before March 22nd. Explain to the FCC Commissioners how an increase in cost, caused by the imposition of economically irrational fees designed for the circuit-switched, geographically limited world, discourages investment, deployment, and consumer up-take. This debate should be about access of the American consumer to VoIP services -- those consumers who are just beginning to accept what we early adopters have always known -- that VoIP gives us ultimate control over our communications experience. And it is you, the visionaries and innovators who will make these services a reality for the American consumer.

So how can you make a difference in this debate? Send an email:
Chairman Michael K. Powell: Michael.Powell@fcc.gov;
Commissioner Kathleen Q. Abernathy: Kathleen.Abernathy@fcc.gov;
Commissioner Kevin J.Martin: KJMWEB@fcc.gov;
Commissioner Michael J. Copps: Michael.Copps@fcc.gov;
Commissioner Jonathan S. Adelstein: Jonathan.Adelstein@fcc.gov;

Pick up your SIP phone, or file a public comment (try the IP services proceeding Internet Enabled Services including Voice over IP - Docket 04-36. The FCC does not have an "easy" comment capability for the Level 3 proceeding). Tell the FCC Commissioners that granting the Level 3 request and affirming that reciprocal compensation, not access charges, apply to IP-PSTN traffic is the only way to maintain the consistent, cost-based compensation regime that has been in place for VoIP providers from the beginning.

Don't let the FCC squeeze out the second wave of consumer adoption before the excitement really begins!

Posted by jeff on March 2, 2005 10:34 AM | Permalink

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The problem here is not having enough votes on your side. It has been suggested, that by supporting the competitive service providers, i.e., ISP/CLEC in keeping their access open to broadband services (currently DSL) from the BOC/LEC, that the stand alone VoIP providers would gather more support within a certain agency.

With loss of competitive choices for consumers and businesses for broadband, will come fewer choices for VoIP. If the market goes to just two choices for voice and Internet, i.e., BOC/LEC and MSO, then there will be an even greater battle to fight.

The VoIP providers have at their disposal, a significant amount of ISPs, CLECs and their millions of customers able to support the fight against the forbearance issues facing both industries. You are invited to join, just give us a call.

Sincerely,
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Co-founder WBIA

Posted by: Frank Muto at March 3, 2005 07:59 AM

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