The term "phantom traffic" is a misnomer, as most independents (independent operating companies, IOCs) are well aware of the extra traffic flowing through their networks. What is unknown is the traffic's origin, which makes much of this traffic unbillable, despite the completion of calls. Where CLEC switches are used for numerous LATAs, reciprocal compensation billing also is being affected.
Whether this difficulty stems from unethical practices by IXCs, RBOCs, CLECs, ISPs or wireless carriers is purely conjecture at this point. It could very well be that these entities have valid technological issues to blame for the apparent loss of necessary jurisdictional data.
All that is known is that as much as 20 to 30 percent of terminating traffic is unbillable—a problem that is expected to get even worse with growing VoIP and wireless traffic. Already, independents terminating calls that originate on wireless and sometimes CLEC networks lose thousands if not tens of thousands of dollars monthly.
A Closer Look at Network Interconnect
To understand phantom traffic, one has to first grasp the complexity of interconnections used to carry traffic.
Because it is cost-prohibitive for long-distance and wireless carriers to have direct trunks to every end office within a geographical area, they usually have trunks that link their POP (point of presence) to access tandems, generally owned by the RBOCs. The access tandem provides centralized switching between various carriers, as the wireless carriers (also known as CMRS, commercial mobile radio services) set up metro switches that receive traffic and direct it to trunks to the access tandem, and independents (independent operating companies, IOCs) or CLECs with end offices also have direct trunks to the access tandem.
IXCs will put direct trunks from their POPs to end offices if there is enough traffic to warrant that, but in most cases an IXC, wireless carrier or CLEC doesn't have enough traffic with IOCs to warrant creating direct trunks to end offices. Instead, all the traffic—extended area services (ESA), intra-LATA and wireless—comes across direct trunks through access tandem providers.
The access tandem providers have direct trunks from all the entities' POPs and—by analyzing the numbers associated with calls, access tandem providers or subtending carriers—can place calls into different buckets for billing access charges to IXCs (such as Sprint, and AT&T). If CLECs are used, EMI records are produced so that IXCs can be charged by CLECs.
The problem is that in wireless-originated calls, the CPN (calling party number) is not able to reflect the point of origination, because it is assigned from the cellular customer's home location rather than the actual location where the call begins.
As intra-LATA traffic is increasingly directed to CLECs, the identity of the originating IXC is increasingly obscured. Consequently, the outcry by IOCs is reaching a fever pitch, since they believe access tandem providers know the jurisdiction of originating calls.
However, IXCs claim they are embroiled in similar bypass battles with CLECs—in some cases going so far as to refuse traffic exchange, much the same as some independents want to refuse traffic from the IXCs. In the bypass phenomenon, wireless carriers terminating to IXCs may pass on various types of traffic that are terminated as local calls. That means that subtending IOCs do not get the EMI records from the IXC to bill for access.
Some say disparate tariffs are to blame, as well as pressure on long-distance carriers caused by the commoditization of voice, which is forcing them to look for cheaper terminating access fees (see "JIP—The Silver Bullet?" below).
Because disparity between intrastate and interstate tariffs is pushing the use of least-cost routing, RBOCs will continue to make outside deals with third parties, such as tandem switch operators or CLECs. That means it will be all the more difficult or impossible for terminating telcos to determine jurisdiction for toll calls.
What is happening is that wireless traffic is traveling in stealth, since the corrupted or stripped origination data is traveling in SS7 signaling messages through equal-access trunks designed to handle local traffic only. Sometimes CPNs come in as a series of 9s or zeroes, or under the guise of a bogus number.
The AMA, CDR and SS7 IAM messages lead to the termination of inter-MTA wireless traffic on mixed-use tandem trunk groups. That leads to a disproportionate amount of long-distance traffic routed over trunks designated for local phone calls.
Complications around calls originating on a wireless network for carrier access billing (CABS) to an IXC are further complicated, because cellular switches often serve multiple LATAs.
The bottom line is that the JIP (Jurisdictional Information Parameters) and originating LRN are insufficient for reflecting jurisdiction of calls, as they are uniquely defined at the switch level. In cases where wireless numbers are ported into wireline offices, the terminating company will also have a problem identifying the originating service provider for intra-LATA calls that are not delivered to the terminating company over a direct connection with the wireless provider.
Even when the originating carrier is known, IOCs are hard pressed to get paid, since CLECs have little incentive to negotiate when they know they don't have to pay higher tariffs if they work through the IXC rather than the IOC.
When the IXCs tell independents to bill the tandem switch operators or CLECs with which they work, third parties refuse to pay because they have no interconnect agreements with the IOC; rather, deals are forged directly between the RBOC and the CLEC, or the RBOC and the IXC. That means everyone in the mix gets compensated except for the terminating carrier.
There now exists no way to set mediation and billing rules to pick up anomalies in traffic assumed to be access calls, because the data just is not there.
Because high rates are pushing IXCs to seek out lower ones, they will continue to terminate traffic with a less expensive CLEC, thus bypassing the access tandem and rerouting traffic on a direct trunk to the RBOC. That means the RBOC assumes the traffic contains local calls to an end office. Some say RBOCs should be pushed to evaluate traffic on those trunks to see if originating numbers in the traffic are obliterated or bogus.
Fighting Back
Most IOCs believe the bigger players have little incentive to shoulder the time or cost of evaluating their traffic to ensure that IOCs can bill for access. As a result, IOCs have begun trying to find the data on their own and are putting real pressure on state public service or utility commissions and the FCC to get RBOCs to be fairer in the way they do business.
Many independent lawsuits and even a couple of class-action suits are in the making.
For example, Wisconsin-based Chibardun Telephone Cooperative is taking legal action against SBC for phantom traffic.
"We agreed to carry intra-LATA traffic at certain tariff rates, but then SBC started sending whatever they wanted over our facilities. They refused to pay tariffs based on our contracts with them," says CEO Rick Vergin. At the height of the problem, he says, as much of two-thirds of Chibardun's traffic was not paid for. "We were losing out on as much as $50,000 per month because of 'camouflaged' traffic that we carried under tariffs to terminate," Vergin says.
Likewise, he cites government criticism about the inability of independents overall to roll out next-gen services to rural America. "But there has to be recognition that tariff rates have to be adjusted accordingly," he says, "as the costs incurred for providing services in rural areas are covered with terminating access fees."
Chibardun has met with SBC numerous times in attempts to convince SBC to eliminate agreements with third parties that deliver phantom traffic to Chibardun.
Though the option to not terminate calls exists, it would be extreme. "It would give us some negotiating power in getting transiting carriers to give us the data to identify the originating carrier," Vergin says. However, he concedes that any attempt to shut off facilities for questionable traffic would fail. "Customer backlash would be significant if intrastate long-distance calls were not completed. SBC knows we can't do that," says Vergin. There's also the consideration that sometimes overflow conditions dictate that routing be changed, which means the company could be shutting down a trunk group handling that overflow.
Some IOCs are considering asking tandem switch operators to separate legitimate calls from illegitimate by having one facility for direct calls to the IOC, and another for that of traffic going between it and its CLEC or wireless partners. However, most believe re-designating a percentage of facilities for intra-LATA traffic and another percent for phantom traffic would not be a cost-effective solution.
Chibardun, like many IOCs, has been told by SBC to bill the originating carriers with which SBC works.
According to SBC spokesman Steve Lee, Chibardun's claims are "without merit." He emphasizes SBC's contention that it is not responsible for paying termination access charges for calls that do not originate on the SBC network. Secondly, he reiterates that SBC's agreements with third-party carriers require those carriers to enter into termination compensation agreements with companies like Chibardun. "Their characterization of this as phantom traffic is false," Lee says. "They know where these calls come from, and it is incumbent upon them to reach agreements with third-party carriers."
Of course Chibardun, like other IOCs, claims it is extremely difficult, if not impossible, to figure out who the originating carrier is, since either the information is stripped or, because of number portability, the jurisdiction is not known for calls originating from a portable NPA-NXX.
Both sides agree the current system of intercarrier compensation is weak, which is why SBC, Chibardun and many other companies are working to streamline and simplify it through intercarrier compensation.
Until some sort of reform comes to fruition, IOCs terminating phantom calls are looking for technological solutions that fill in the void left by regulatory holes. Some are attempting to put new probes on their networks that collect as much data as possible from their CDRs for terminating access tandems or end-office switches. As they attempt to trace traffic paths, they are discovering that the ROI for technology to put together reports for bills and subsequent lawsuits might be worthwhile.
"A million minutes a month go through my switch and I can't get compensated," says Herb Bivens, general manager of United Telephone Company, voicing frustration about carrying increasing traffic from CMRS carriers and ISPs. With the increase in wireless-originated calls and data and voice traffic coming from ISPs, he says, "it's like loaning my car out to someone day in and day out so they can get to work, but never getting compensated for gas or mileage."
Bivens recently employed Tekelec's auditing solution to drill deeper into signaling data for data mining. "By collecting SS7 billing records, independents can back up their bills with reports that quantify traffic from each interconnect partner," says Russell Travis, senior manager for product marketing at Tekelec. He believes all carriers at one time or another are somewhat responsible for phantom traffic. "With least call routing, departments often are unaware of what's happening on their networks," Travis says, "so it can become a problem for billing, regulatory and engineering folks."
Milt Haws, director of revenue assurance at Valor Telecom, has assembled a coalition of revenue assurance folks from several Tier 2 and Tier 3 telcos to devise strategies for billing and getting compensated for carrying phantom traffic.
Working closely with Engel Telecom Consulting, Haws has successfully used a combination of trunk inventory, switch administration data (CCS, or 100-second calls) and PEG counts used by trunk engineers to know if trunk capacity is sufficient, as well as algorithms that convert switch data into equivalent minutes of use to compare with CABS data. "Then we can see translation errors and resultant leaks," says Haws.
However, more than just identifying leaks is important, as independents need to see how much access they've lost, according to Andre Engel, president of Engel Consulting, which has succeeded in procuring compensation from IXCs for independents like Valor.
"They gave us as much CABS data as they could so we could do a trend analysis to determine what IXC's terminating traffic [billing data] had literally disappeared," says Engel. "When we saw a large drop-off in traffic, we asked the IXC, which engaged in least-cost routing and wholesale carrier agreements with companies that also work with Valor. "We saw a CLEC operating in the same territory with direct trunks to the independent in the same area. Supposedly, it was local traffic only, which is done on a bill-and-keep basis, which means no bill for terminating charge."
In doing traffic analysis, Engel got switch administration data (CCS calls) to enable graphing of the usage information from the IXC. When traffic that had dropped off was compared with the data coming across local trunk groups, there was a precise correlation between minutes lost for access and the increase in traffic over local trunk groups. "Once we presented the graphs to the IXC," Engel says, "they paid the bill."
Telcordia has also claimed some recent success in recovering revenue related to phantom traffic with one of its customers. "We put probes in the network to understand how calls were being routed and what the flows were among all the parties," says Tom Donaher, managing director for revenue assurance in Telcordia's Telecom Services Group. Because the company works with AMAs with so many carriers, he acknowledges that malfunctions are often caused by network configurations involving switches that are making mistakes. "We had to set up a complete lab with probes that collect data so that carriers can see all the traffic that does not have calling numbers, and from that they can try to interpret how it maps back to interconnection agreements," says Donaher.
As ILECs, CLECs and IXCs employ aggressive strategies to mitigate this problem, there could be some substantial revenue recovery—however, success might backfire. As bypasses are proven out, and millions of minutes of bypass over many years are found, the IXCs are digging in their heels and becoming even more reluctant to give client information about how traffic has been routed.
"They will realize the thousands of minutes bypassed and tens of thousands of access fees that had not been paid, IOCs will go to litigation, and in discovery proceedings, the IXCs will have to divulge who sent traffic to whom and how it got terminated," predicts Engel.
JIP—The Silver Bullet?
Whether SS7 IAM messages are being manipulated to circumvent access charges and tariffs by passing traffic over lower-cost trunks, or whether data corruption results because legacy software on switches cannot handle jurisdictional information, the solution might be sitting right before everyone's eyes. That's because most agree the problem could be remedied if all carriers voluntarily populated signaling messages with jurisdictional data about where traffic originated from a CPN.
For the moment, though, "best practices" are the rule, until the FCC takes action or until carriers come together to resolve the issue on their own.
For now, the states seem to be waiting for action by the FCC, but rate disparity issues are still being evaluated. The FCC is looking at existing intercarrier compensation, now that the CMRS carriers and Internet-based providers are growing prevalent in the mix. The FCC has an NPRM (notice of proposed rule making) for intercarrier compensation that would reform interconnection protocols among all carriers interconnecting with local telephone networks: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-33A1.doc
The aforementioned IOCs have all launched complaints either individually or under the auspices of organizations like ATIS OBF (Ordering and Billing Forum) and NIIF (the Network Interconnection and Interoperability Forum), OPASTCO, NECA, NANC (the North American Numbering Committee) and the Telecommunications Fraud Prevention Committee.
One of the more influential calls to the FCC to forge ahead with reforms to mitigate phantom traffic has come from what has now become known as the "T-Mobile order," which can be found at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-42A1.pdf
In answer to the T-Mobile petition—and those from others, such as CenturyTel and myriads of IOCs—the FCC in February put out an order saying it would not uphold any wireless termination tariffs from the past, but suggesting that going forward, "wireless carriers will have to negotiate with rural LECs for intercarrier compensation agreements," says FCC spokesman Mark Wigfield. That, he believes, will bring wireless carriers to the table and give IOCs more power.
To get midsized carriers more representation, Telcordia met with the FCC in late May (docket No. 01-92 on the FCC Web site). "There is a need for explicit federal rules for identification of intercarrier traffic, which means enforcement," says Telcordia's Donaher.
Despite these efforts, most companies would prefer that the industry work collectively rather than have the FCC involved, as the consensus is that modifications to the JIP would resolve the phantom traffic issue.
ATIS, via OBF, looked at the issue from a billing perspective, suggesting that IXCs modify either the JIP or originating LRN from the originating office to enable IOCs to bill for the traffic they carry.
They suggested this be optional, to avoid setting the stage for incomplete calls when certain networks lack the capability—although they are a shrinking minority in today's telecom landscape.
It was also determined that a technical change to the protocol could be cost-prohibitive for some companies.
With the suggested modification of the JIP, a wireless switch would be assigned a unique JIP value for each state/LATA combination served by that switch. The JIP would be a "resident NPA/NXX" for one of the originating cell sites and would be unique to the state/LATA for all cell sites to which it is assigned, according to the OBF. The proposed solution requires wireless switches to be able to identify the originating jurisdiction (state/LATA) of the call and assign the appropriate JIP value in the signaling. The JIP would be a required field for all cellular originated calls, regardless of number portability or pooling. The terminating company would record the JIP and place it in the ORIG LRN field (first 6 digits) of the billing record.
Likewise, a CLEC switch that serves multiple jurisdictions would be assigned a unique JIP for each state/LATA that it serves. The CLEC switch would need to be able to determine the originating jurisdiction and assign the appropriate JIP. The JIP must be a required field for all wireline calls from a ported number and for all originating calls from a switch that serves multiple jurisdictions.
The terminating company would then be able to determine the true jurisdiction of all such calls by using the state and LATA of the JIP as reported in the Local Exchange Routing Guide (LERG).
The OBF is trying to finalize the standard, but once the standard is established, the question remains whether there would be any enforcement through either state or federal agencies.
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