FCC Adopts Order to Discourage Toll Free Arbitrage

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The Federal Communications Commission (FCC or Commission) has adopted a Report and Order (Order) reducing intercarrier compensation charges that provide incentives for toll-free (also known as 8YY) telephone number arbitrage schemes.  8YY telephone services have provided significant benefits to consumers and businesses alike by placing the costs of such long-distance calls on the entity receiving such call. In recent years, this system has been subject to arbitrage and fraud as robocallers have made massive amounts of illegitimate calls to 8YY telephone numbers in areas where higher rates are charged to such carriers.

In the adopted Order, the Commission sets a plan for the transition towards a bill-and-keep system which would combine 8YY originating transport and originating tandem switching into a single nationwide tandem switched transport access service rate capped at $0.001 per minute, focusing on the end-users (the entities and individuals making the choice to subscribe to that network).  The Commission noted that carriers may use universal service support from the Connect America Fund Intercarrier Compensation fund to recover any lost revenues as a result of this transition.  The Commission hopes that this new framework will discourage toll free arbitrage and enhance the value of toll free services for consumers and businesses.

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