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facts on more on Cell Phone Controversy in Winthrop
From: David Farber <dave () farber net>
Date: Sun, 15 Aug 2004 11:06:11 -0400
Begin forwarded message: From: Gerry Faulhaber <gerry-faulhaber () mchsi com> Date: August 15, 2004 10:52:45 AM EDT To: dave () farber net Subject: Re: [IP] more on Cell Phone Controversy in WinthropSome facts about the rules regarding termination of calls (cell and others)
by incumbent wireline carriers: Federal (FCC) and state regulators *require* all wireline telephonecompanies to interconnect with any and all carriers (wireline, wireless and long distance). Reason: telephone is a network externalities business, and
near-monopoly incumbent local exchange carriers (ILECs) could throttle competition by refusing interconnection.Traditionally, originating carriers have had to pay terminating carriers a fee, generally pennies per minute, for terminating their calls. These are
governed by interconnection agreements between the carriers, often constrained by regulators so that near-monopoly LECs don't gouge upstart competitors (CLECs) or wireless companies. Such negotiations are oftencontentious; there is a long history of tricky business practices associated with interconnection agreements involving CLECs, long distance companies,
and ILECs. The FCC has had to step in more than once to halt outrageous scams.In the present situation, there are few facts in the IP post to know exactly what is going on. Surely, Iowa has approved termination charges in place for all carriers. Perhaps the wireless company is simply not paying their bills. Or the wireline ILEC doesn't think they are getting paid enough. In any case, this appears to be a business dispute, about to spill over onto customers. The Iowa regulators are right to step in and prevent the locals
from disconnecting, but they also must adjudicate this business dispute, which properly should be decided by the regulators or the courts, not by unilateral cut-offs of customers.The responder writes: "I have, however, never seen any suggestion that they
[wireline companies] should provide the service [termination] for free."Well, there certainly is. Many have notices that termination charges are contentious and subject to strategic gaming, and simply move money around. Why not roll the marginal costs of terminating calls (which is essentially
zero) into the monthly rate we pay for telephone service, and eliminate intercarrier compensation altogether? And maintain the regulatory requirement to interconnect/terminate? Then all carriers complete each others' calls and no complicated intercarrier billing arrangement is required, and no strategic gaming. This arrangement is referred to intelephone-ese as "Bill and Keep"; an economic analysis of it is in an FCC working paper http://www.fcc.gov/Bureaus/OPP/working_papers/oppwp33.pdf . I
personally think it's a good idea; in fact, bill and keep is essentially what the large Internet backbone networks do: they carry each others' traffic without compensation, on the basis that it is pretty nearly in balance anyway, so why set up a complex billing system? So there is a healthy precedent. Professor Gerald R. Faulhaber Business and Public Policy Dept. Wharton School, University of Pennsylvania Philadelphia, PA 19104 currently on leave at: Penn Law School, Univ. of Pennsylvania Philadelphia, PA 19104 ----- Original Message ----- From: "David Farber" <dave () farber net> To: "Ip" <ip () v2 listbox com> Sent: Sunday, August 15, 2004 9:59 AM Subject: [IP] more on Cell Phone Controversy in Winthrop Begin forwarded message: From: Bjørn Vermo <bv () norbionics com> Date: August 15, 2004 7:20:31 AM EDT To: dave () farber net, Ip <ip () v2 listbox com> Subject: Re: [IP] Cell Phone Controversy in Winthrop On Sun, 15 Aug 2004 06:02:44 -0400, David Farber <dave () farber net> wrote:
It's a first-of-its kind attempt. A small, local phone company is trying to charge cellular providers for dialing home phone numbers. If wireless companies don't comply, the company says it will cut off cell phone calls to land lines in the town.
What is first about this? Of course mobile operators have to pay landline operators for call termination, just as landline operators have to pay mobile operators for calls in the other direction and one mobile operator charges the other when customers of one mobile operator call customers of another. This is a decade-old integral part of the international GSM interoperability. How could it be otherwise? Why would one operator want to forward calls the other operator gets all the income for? Does this also mean that the local telephone company is terminating long-distance calls from other companies for free? There have been complaints, both here in Norway and in other countries, that incumbent monopoly operators have been charging too much for call termination. This applies both to calls from mobile operators and from competing landline operators. I have, however, never seen any suggestion that they should provide the service for free. ------------------------------------- You are subscribed as gerry-faulhaber () mchsi com To manage your subscription, go to http://v2.listbox.com/member/?listname=ipArchives at: http://www.interesting-people.org/archives/interesting-people/
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- facts on more on Cell Phone Controversy in Winthrop David Farber (Aug 15)