Industry Spars over Missoula Intercarrier Compensation Plan

Industry has 4 options, he said: (1) Adopt the Missoula plan “with or without modifications.” (2) “Do nothing and revisit [the problem] later.” (3) Take a “baby step approach” by adopting the plan in parts -- the phantom traffic provision, Universal Service Fund contribution reform, and perhaps lowering intrastate access charges to the national interstate access level. (4) The FCC could develop its own plan, which Baum termed “not likely.”

The baby-step option isn’t a bad idea, said Billy Jack Gregg, W.Va. PSC consumer advocate and NASUCA representative on NARUC’s task force. His version of the simpler plan would fix phantom traffic, cut intrastate access rates to the interstate level and address interconnection concerns, which means “who pays when.” Missoula isn’t good for consumers, he said, claiming its effort to lessen access charges would make consumer payments balloon.

Encouraged by the FCC, industry groups for years have tried to unify a host of differing types of payment that flow from carrier to carrier, convinced the arcane system stymies competition and delays migration to broadband telephony. The latest attempt, resulting in the Missoula Plan, is considered noteworthy because supporters include representatives from 2 different perspectives on the issue -- Bell companies that pay out a lot of access charges and small rural companies that depend on access charges for much of their revenue. But while AT&T and BellSouth are strong proponents, other Bells aren’t; Verizon has registered opposition and Qwest is deemed neutral.

Internet backbone provider Level 3 supports the plan as a way “to squeeze regulatory arbitrage out of the market,” a necessary step “to move to an IP world,” Vp Bill Hunt said: “This plan is a regulatory Rorschach test. Everyone is going to see something different in this plan. Some things we don’t like and some, in the spirit of compromise, we do.” Stephen Kraskin, an attorney who represents rural telecoms, never thought he'd “see AT&T and the rural companies together,” he said. “Must haves” for the rural telecom companies included “a mechanism to replace revenues achieved from access” and the recognition that rural companies can continue to operate under a rate of return, Kraskin said.

Reform is needed to eliminate the “tremendous amount of dispute” over disparate pricing and to “transition to the broadband world,” AT&T Vp Joel Lubin said. Access charges won’t exist in a broadband world, he said. The Missoula plan answers the question, “where is this money going to come from,” Lubin said: “You're not going to get a consensus from everyone… On the other hand, if you want a rational transition from circuit switching to the broadband world, that’s what we think we have.”

Opponents call the plan too complex, with 3 categories of carriers based on size and several collection mechanisms with varying impacts on different carrier groups. NCTA Assoc. Gen. Counsel Steven Morris said Missoula “makes it harder for cable and other facilities-based companies to compete” because it “increases interconnection and transit fees” used by cable and other facilities-based competitors. “Transit rates are higher than carriers pay today and will increase,” said CTIA Asst. Vp Paul Garnett. He said universal service support is limited to ILECs, which “discourages market entry by more efficient competitors.” The plan should be “economically efficient, preserve universal service and eliminate artificial regulatory distinctions,” Garnett said: “Missoula falls short on all 3.”