FCC Plan to Stem Traffic Pumping Gets Mixed Response

The FCC in October proposed revising access-tariff rules to stop the practice (CD Oct 4 p1), also known as “access stimulation.” It occurs when companies such as free calling services provide high traffic to rural telecom carriers, which then increase access charges paid by long-distance companies that transport the increased traffic to the local carriers’ service areas. The FCC has proposed several options to stem the problem, such as requiring carriers to file revised tariffs if demand exceeds a threshold or to file “certifications” that they aren’t stimulating traffic. Another would override the “deemed lawful” provision of the Telecom Act to stop automatic approval of a midcourse tariff that appeared to be triggered by a large increase in demand.

The Mercatus Center said the commission rightly concluded that access stimulation is unreasonable, but its proposal to require carriers to file revised tariffs if demand reaches a threshold would be hard to carry out. “Any attempt to define the increase in demand that would trigger the requirement of filing the revised tariff would be difficult, complicated and arbitrary,” the center said.

A better solution would use the agency’s forbearance power to let long-distance companies refuse to connect customers to a local company that’s stimulating access charges, the center said. Or the long-distance company could be allowed to pass the access charges “directly to the customers who made the calls” rather than spreading the costs across all customers, the group said. The Mercatus Center said the comments were its own, not those of any interest group: “If the Commission were to choose either solution to address the problem of access stimulation, this unreasonable and wasteful practice would end.”

Cavalier Telephone praised the FCC for trying to end “abusive traffic distortion practices.” But the carrier recommended that the agency add the proposed remedies to the intercarrier compensation reform proceeding rather than adopt “piecemeal regulations” now. Many of the FCC’s proposals are “overbroad and would in fact harm legitimate business practices,” the company said. It opposes a plan to require competitive carriers to file quarterly reports of interstate access minutes and modify its tariffs if a threshold is met. “Given the limited resources of CLECs such as Cavalier, engaging in further certification/reporting processes is unnecessary and would be both overly-burdensome and costly,” it said.

The National Telecommunications Cooperative Association said the FCC shouldn’t apply new regulations to carriers taking part in the National Exchange Carrier Association’s access charge pools. “Participants in the NECA pools lack incentive and ability to exceed their allowed rate of return because their revenues and expenses are pooled,” the NTCA said. Though access stimulation is more commonly seen among “self-certifying non-NECA pool participants” than others, the FCC should carefully define “traffic stimulation” by these carriers to make sure they aren’t penalized for one-time events such as hurricanes or terrorist attacks, NTCA said.

USTelecom strongly opposes “arbitration schemes” such as access stimulation but warned the agency not to take actions that are too “far-reaching.” Some proposals, such as overriding automatic tariff revisions, “would be akin to the proverbial discarding of the baby with the bath water,” USTelecom said.

The Rural Alliance said it feared the FCC would “adopt rules that have unintended negative consequences for carriers that have not experienced significant demand increases.” The group, made up of about 300 rural telephone companies that support revamping intercarrier compensation, said the FCC should “proceed with caution” and adopt an approach that focuses on “over earnings and access stimulation that is carrier-specific.” If the agency is worried about rates, it also should deal with cases in which access demand is declining, “which is more prevalent than significant increases in demand” and can result in “underrecovery of costs” by rural carriers, the alliance said.

AT&T urged the commission to “promptly adopt modest rule changes to put a stop, once and for all, to the concerted and ever-expanding campaign being waged by a small minority of rapacious LECs to abuse the existing rules to bilk hundreds of millions of dollars from their customers.” The agency can’t rely on “case-by-case suspensions, investigations and litigation,” AT&T said. “History teaches that small ILECs inclined to such misbehavior and the coterie of brokers, consultants and fly-by-night Internet-based communications service providers that seek to share the spoils are remarkably creative.” Without rule changes, “they will continue to develop and deploy new schemes that make a mockery of the Commission and its core Communications Act mandates,” said AT&T.

Traffic-pumping schemes include “'free’ or very low cost chat lines, often with pornographic content, conferencing services, voicemail, and international calling,” AT&T said. “Initially, traffic pumping was confined to a relative handful of unscrupulous small ILECs, but in the past two years both the number and magnitude of schemes has mushroomed.”

The NCTA also supports the FCC’s effort “to eliminate access charge abuses by rural LECs, both incumbents and competitors.” Excessive access charges “raise the cost of providing voice service and therefore limit the benefits that consumers will realize from competition,” the NCTA said.

Conference services and others are getting an unfair rap, said Global Conference Partners, which said it works with rural telecom companies to provide services that benefit the public. “Notwithstanding the many attempts to portray traffic increases related to competitive conference calling services as a ‘problem’ requiring an FCC regulatory solution, these services provide a substantial public benefit” by providing “the solution to the long-standing dearth of viable conference service options available to large segments of the public,” Global Conference Partners said.

“The introduction of competition from innovative conference services is a market development that the large IXCs did not expect,” the company said. “There is absolutely no justification, however, for an FCC change to the existing access charge regulation,” it said. “An FCC rule gerrymandered to protect [long distance companies] would only harm consumers, augment regulatory uncertainty for competitive providers and encourage incumbent wireline carriers not to innovate and offer services for which there is a clear and growing public demand.”