FCC Reciprocal Compensation Means Win for ILECs

The Federal Communications Commission has classified telecom traffic delivered to an ISP as interstate access traffic and not subject to reciprocal compensation. The Commission also has set caps on the rates for intercarrier compensation for ISP-bound traffic.

For the first six months, the rates will be capped at $.0015/minutes-of-use (mou) and for the 18 months thereafter they will be capped at $.0010/mou. The final rate cap will be at $.0007/mou. These caps only apply if an ILEC offers to exchange all local traffic at the same rate. The rate reduction will lower costs for ILECs thereby decreasing revenue accrued by competitive carriers from Internet traffic payments.

The Court of Appeals for the District of Columbia Circuit order asked the FCC in March for an adequate explanation of which traffic applies to reciprocal compensation rules. The Commission’s recent decision solidifies the its position to consider Internet traffic as long-distance. It says reciprocal compensation is not limited to local traffic but applies to all telecom traffic with certain exceptions. ISP-bound traffic falls within one of these exceptions, “information access,” and is therefore is exempt from reciprocal compensation rules.