February 11, 2005

The Federal Communications Commission (FCC) is to continue analyzing complex intercarrier compensation issues. While all five FCC commissioners agreed that the present system that distinguishes wireless, wireline, local and long distance services is very outdated, they strongly disagreed on any direction to any practical solution to the problem.

They voted, some -- including FCC Chairman Michael Powell -- reluctantly, to seek comment on seven industry-generated reform proposals. A key commission-generated report, which, say industry observers, is a "path to bill and keep," was excluded from the discussion, though.

Under the bill and keep format, whoever originates and bills for a call keeps the revenue associated with that call. Wireless carriers would benefit from such a reform, as they would not lose revenue to wireline carriers who may complete some of their calls.

Rural carriers, however, have opposed the approach, as they would lose revenue because they would have to complete calls from outside their local areas, while calls originating from their exchanges by nature is small.

FCC Commissioner Michael Copps said the FCC's proposal, which involved bill and keep, was excluded to "engender discussion" on the issue and not bias it toward one solution.

Copps said an open discussion on the other plans could facilitate a solid resolution to the issue "this year." Powell, however, said the FCC's vote to seek more information was "timid" and said the commission remains "parked in neutral" on the issue.

The issue of intercarrier compensation reform has been pending at the commission since 2001.

Two related petitions from wireless carriers, one from T-Mobile USA, Western Wireless and Nextel Communications and another filed by Sprint, were removed from the FCC's meeting agenda at the last minute.

They were moved to the more subjective "circulation" approval process among commissioners that doesn't involve public decisions.

The petitions, filed two years ago by the carriers, seek to specify what compensation rates they should have with rural carriers.

CTIA, which had goosed the FCC last week to act on the petitions, wasn't happy with the move. "The FCC's failure to decide these petitions robs consumers in the very markets that would benefit most from additional competition," said Steve Largent, president and CEO of CTIA, in a statement.

"Each FCC commissioner and many members of Congress have on multiple occasions asked what could be done to improve service to rural consumers.

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Acting favorably on both petitions would be a significant step toward that goal, and I hope action on both petitions will be forthcoming very soon.

How can the FCC have any hope of reforming a hopelessly broken intercarrier compensation system if it cannot even restate long-settled FCC rules that have been repeatedly upheld by the courts?"

The move to the looser approval process among commissioners "was the preference" to handle the item, Powell said after the meeting. Copps said he was prepared to act on that issue as soon as it crossed his desk.

Source: Wireless Week