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Intercarrier Compensation

This document analyzes the fundamental concepts of intercarrier compensation in telecommunications, focusing on originating and terminating calls. It discusses the Calling Party's Network Pays (CPNP) model, Bill-and-Keep arrangements, and the implications of reciprocal compensation and access charges. The nature of regulatory arbitrage is examined, exploring how local and long-distance traffic is treated similarly while highlighting the need for updated compensation methods. Key considerations include the role of CLECs, ISP compensation, and the impact of technology and regulation on current practices.

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Intercarrier Compensation

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  1. TC 310 June 3, 2008 Intercarrier Compensation

  2. Basic Concepts • Originating • Terminating • Calling-Party's-Network-Pays (CPNP)‏ • Bill-and-Keep • Reciprocal Compensation • Access Charges

  3. Regulatory Arbitrage • Local and Long Distance essentially identical • Does it matter where traffic comes from? • Some implicit subsidization still occurring • CPNPs is current set up • Charge originator • No effect on terminating customer

  4. Re-route through CLEC • CLECs get TELRIC pricing for local x-fer • Long Distance has to pay Access Charges • Route traffic through CLEC • Work out deal/are affiliate • Strip “LD” tags • Possibly a Crime • MCI

  5. ISP Compensation • Viewed as LD, calling website, 1 call • Should pay access charges • Exempt due to Enhanced label • Business line rate • Switch to CLECs for free • ILECs pay CLECs • Arbitrary high, even pay ISPs for business

  6. IP-to-PSTN • Access or reciprocal compensation rates? • Exemptions should just be for own customers • ILEC position • VoIP perspective is to treat as local call • Is traffic compensated at all?

  7. Wireless • Do they get access charges? • Detariffing suggests no • Private contract only • Route through CLEC, pass back to Wireless

  8. Big Picture Lesson • Technologically similar • Regulation Differs • CPNP keeps this going • Bill-and-Keep may break it • Need to update compensation to reflect engineering realities

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