IP: Comment on Weber ...FCC appears poised to kill reciprocal compensation

[David Farber <dave () farber net>]

> From: Chris Savage <chris.savage () crblaw com>
> To: "'farber () cis upenn edu'" <farber () cis upenn edu>
>
> Dave,
>
> I've been involved in this issue for the last four years.  I await with 
> interest the chance to read the FCC's actual order to see what they are 
> now doing.  But a few comments are in order.
>
> First, the issue of holding times is a red herring.  It is perfectly 
> reasonable to establish a compensation rate that has a higher initial 
> minute (to cover higher costs of setting up a call) and then a lower rate 
> for each "subsequent minute" to reflect the fact that maintaining a call 
> minute by minute is cheaper than the activity in setting it up.  This 
> treats all long calls alike -- whether to ISPs or between teenagers -- and 
> all short calls alike.
>
> Second, talking about anyone being "subsidized" by anyone else in the 
> telephone world is a lot like consultants talking about "synergistic 
> interactions of new technological business models."  Maybe there's some 
> content there, but you have to look very carefully, and ask some very 
> precise questions, to figure out what the content is.
>
> The current state of the rules is that ISPs get to buy "local" service to 
> get lines on which they can receive calls.  And people get to call their 
> ISPs on a "local" basis.  This suggests that the inter-carrier 
> compensation model applicable to "local" traffic should apply, for 
> now.  The main alternative is to treat someone connected to the network 
> like a carrier, and make them pay "access charges," which are widely 
> recognized to be overpriced.
>
> Now, the FCC is as aware as anyone that the whole regime of inter-carrier 
> compensation is messed up, on both the local and long distance side, and 
> has adopted an NPRM to try to sort it out.  That's a good thing.  But the 
> "will of the people" thus far has simply been that they be able to call 
> their ISPs as local calls, which has been the rule in the US since the 
> whole issue formally arose in the regulatory world in 1983.  That has 
> certain logical consequences when you introduce competition, as we did in 
> 1996 -- including that the LEC serving the ISP get paid on the same terms 
> applicable to local calls.  That has been financially unfortunate for the 
> ILECs, which has led to the controversy.
>
> The best policy outcome here is not easy to see, particularly since it 
> depends heavily on what other, related parts of the regulations are "in 
> play."  Should dial-up ISPs pay access charges?   If so, should those 
> access charges be lowered dramatically to bring them closer to cost?  If 
> so, are the ILECs entitled to have the decreased revenues "made up" 
> somewhere else?  If so, where?  But if ISPs shouldn't pay access charges, 
> how does the carrier serving them get paid for switching incoming 
> traffic?  Etc., etc.
>
> Chris Savage
>
>
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