FCC action on ILEC-CLEC reciprocal compensation could have positi...
FCC action on ILEC-CLEC reciprocal compensation could have positive effect on wireless providers as well, Legg Mason said in report released Fri. Report said wireless providers such as VoiceStream, AT&T Wireless and Sprint PCS would see most benefit. Nextel,…
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which is more business-customer oriented, might experience more neutral outcome because its outbound-to-inbound ratio of calls was only about 3-2 and more than 40% of its traffic was wireless-to-wireless, which isn’t subject to reciprocal compensation. Paging companies might have negative impact because more of their traffic flows inbound. Report by Research Analyst Blair Levin said wireless companies paid wireline carriers $400- $500 million per year because more wireless calls were terminated by wireline carriers than other way around. Report said FCC appeared to be leaning toward 2-part plan to ease ILEC-CLEC reciprocal compensation problems that would (1) Set caps on outbound-to-inbound traffic ratio eligible for reciprocal compensation and (2) bill above-cap traffic at 0.1 cent per min. Levin estimated that traffic imbalance was about 4-1, meaning typical ILEC sent 4 calls to CLEC for every call it received. Report said FCC could set 6-1 cap on payment eligibility in first year, 2-1 cap next year. That would mean CLEC revenue would decline only about 7% first year but 40-50% in 2nd year. Such changes probably would set precedent for wireless carriers, “given the FCC’s desire to harmonize regulation in a convergent world,” Levin said.