Stevens Bill Seeks Billing Clarity to Halt ‘Phantom Traffic’

Rural carriers welcomed the bill, which has bipartisan support, complaining that phantom traffic has cost them money for a long time. The FCC has been working for nearly seven years on a larger revamping of the intercarrier compensation system, but no resolution is ready, Stevens said. His bill would require FCC action within 12 months. The agency would have to consider industry standards for signaling, examine current signaling equipment’s limitations and study the cost of updating equipment.

“Senators, we need your action at the federal level,” said Raymond Henagan, general manager of Rock Port Telephone Company, speaking for the National Telecommunications Cooperative Association. Henagan told the committee that nearly 30 percent of smaller carriers’ net operating revenue comes from carrier payments. But nearly 30 percent of carrier traffic can’t be billed because calls lack sufficient billing information, Henagan said. The financial drain is sapping small carriers’ ability to serve rural consumers, he said. Some carriers say the FCC has given permission for them to use “small providers for free because the calls are designated ‘IP’ and are refusing to pay access bills,” Henagan said.

“We need the FCC to confirm that all users of the network must pay for its use,” he said, adding that IP is a technology -- not a service, not a network and not the Internet. Some carriers don’t provide all the call detail information needed for billing. Last year, more than 18 percent of minutes sent over Rock Port’s network traveled free for lack of sufficient call detail, he said.

Sprint agrees with the “narrow and focused nature of the proposed bill,” Charles McKee, government affairs director with Sprint Nextel, said. Ultimately, Congress and the FCC must resolve the issues with intercarrier compensation, he said: “Reform of this broken system is critical to sustaining robust competition in the telecommunications industry.”

The bill should “expressly state that it is not attempting to modify existing intercarrier compensation obligations, including the manner in which the jurisdiction of traffic is determined or the type of network architecture required for the exchange of traffic,” McKee said. The carrier does not believe there is a “significant volume” of phantom traffic, he said. Most disputes arise from the “inherent limitations of the existing Public Switched Telephone Network and the ambiguity regarding the legal status of various types of telecommunications traffic,” McKee said.

Phantom traffic is a large problem, and Qwest wants the FCC to adopt interim measures to fix it, said Lawrence Sarjeant, Qwest vice president of federal affairs. Qwest wants the FCC to reinforce that the 1996 Telecom Act “requires and enables all types of service providers to enter into agreements for the exchange of traffic.” Qwest also backs expansion of the scope of FCC rules requiring sharing of information needed for accurate billing.

VoIP providers fear that some proposed solutions have the “very real potential to stall vast emerging VoIP benefits and limit consumer choices in the future,” said Angela Simpson, president of the VON coalition and government affairs director with Covad. “We believe regulators should adopt rules that create technologically neutral incentives” for exchanging traffic between Internet networks and the legacy phone network, she said.

“Rather than automatically applying yesterday’s rules… we encourage the committee to take a practical, forward- looking approach,” Simpson said. The agency should enforce existing rules and set a new compensation regime encouraging fair competition, Simpson said. Carriers should be encouraged to update networks to accommodate “signaling system” technology, she said. Carriers “bear part of the blame” for the phantom traffic problem because they haven’t made such technology updates.