Activity is reaching a fever-pitch before the FCC on the issue of inter-carrier compensation. Carriers are pitching various plans, each tailored to advantage their own business model. Whether the FCC will actually issue a decision in the face of all of this conflicting advice is anyone’s guess, but nothing before the Commission is more important to the financial health of the telecommunications industry.
By way of background, inter-carrier compensation concerns the monies that carriers pay each other for the origination and termination of traffic. At present, the current regime is a patchwork of disparate rates established to serve various (and often conflicting) public policy objectives and bears no relation to the actual cost of originating or terminating traffic. Under this regime, when a call is received in your home from your neighbor across the street, your local phone company collects one rate (reciprocal compensation, somewhere around $0.003/minute) to complete that call (assuming your neighbor is served by a competing phone company). When you receive a call from your sister a few towns over (say you live in Philadelphia and your sister lives in the suburbs), your local phone company receives a higher rate (intrastate, intraLATA toll access, which can run as high as $0.012 per minute but is usually around $0.02 per minute) to complete that call. When you receive a call from your brother in Harrisburg, your local phone company could receive yet another rate (intrastate, interLATA toll access, which again can run as high as $0.012 per minute but is usually around $0.02 per minute). But when you receive a call from your old college roommate in Princeton, New Jersey, your local phone company could receive a different (usually lower) rate (interstate, interLATA toll access, usually around $0.01 per minute, but higher in rural areas). Of course, if your spouse calls from the grocery store, your local phone company receives something entirely different from the wireless operator.
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