intercarrier compensation

In late May, the Voice on the Net Coalition ("VON") held a series of meetings with FCC Commissioner’s offices concerning VoIP regulations.  The Coalition discussed topics affecting 21 pending FCC dockets, and, according to the summary of the meetings, "expressed concern that additional regulation of the IP communications industry could deter investment and innovation …" 

The FCC earlier today adopted (but has not yet released) a substantial NPRM on universal service fund (USF) and intercarrier compensation (ICC) reform, signaling that the agency is ready (again) to engage anew in its decade long quest to reform these interrelated subsidy and compensation regimes that nearly all interested parties agree are unsustainable.

With roughly $4.5 billion/year in play on the high cost USF side and approximately $8 billion/year at stake on the ICC side, this is a proceeding in which many will want to weigh-in or at least track carefully. Yes, we realize that we said this 10 years ago and again back with the last swell of activity in 2008, but the timing and circumstances of today’s action, as well as the remarks of each Commissioner seem to suggest that odds of the agency taking concrete steps toward adopting meaningful reforms are higher now than they ever have been.

That said, it remains unlikely that the agency could adopt an order addressing comprehensive high cost USF and ICC reform before 4Q11. The process will be neither quick nor easy. And, as many will note, conspicuously absent from today’s NPRM are proposals for USF contribution reform. It seems strange that the fund is to be re-purposed to support broadband in advance of adopting a requirement that broadband providers contribute to the fund. Lifeline reform also gets punted to another day, but the agency promises it is working on getting to this soon. With the proposed USF Mobility Fund also on a separate track, it appears that the Commission has liberated itself from the notion that it must address all pieces of the puzzle at one time in one order.

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Yesterday, the FCC released is Broadband Action Agenda describing the purpose and timing of more than 60 rulemakings and other proceedings the agency plans to conduct in order to implement its recently issued National Broadband Plan. On USF, reform of USF distribution is scheduled for 2Q 2010, but contribution reform is not scheduled to begin until the end of the year. Access charges, VoIP and other intercarrier compensation issues are given a 4Q 2010 start date.
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The U.S. Court of Appeals for the D.C. Circuit has upheld the FCC’s November 5, 2008 ruling continuing the rate cap on CLEC intercarrier charges for dial-up Internet calls.  In Core Communications v. FCC, decided January 12, 2009, the Court found "no legal error in the Commission’s analysis" and thus affirmed the agency’s decision.  This ruling presumably ends a protracted set of challenges and judicial examinations of the FCC’s efforts to limit CLEC charges for receiving ISP bound calls.

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