FCC Proposes Rules to Curb Traffic Pumping and Call Termination Arbitrage

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The FCC has released a notice of proposed rulemaking (NPRM) proposing rules designed to eliminate the financial incentives causing companies to engage in access stimulation – – otherwise known as “traffic pumping” – – and give access-stimulating local exchange carriers (LECs) two choices about how they connect to interexchange carriers (IXCs).  Despite the industry progressing towards a bill-and-keep settlement paradigm, there still exist carriers engaging in practices consisting of wasteful arbitrage.  These harmful practices usually consist of rural market LECs with relatively-high switched access rates entering into arrangements to terminate calls for an entity with a high call volume operation, such as a chat line, adult entertainment call, and “free” conference call service providers, collectively known as high-volume operators.  The Commission has previously tried to stop these bad actors by adopting rules governing access-stimulating LECs aimed at reducing their ability to profit from traffic pumping.  However, access-stimulating LECs have adjusted their practices in recent years by interposing intermediate providers of switched access service not subject to FCC rules.  If the rules are adopted, LECs will have the following two choices for connecting to IXCs:  (1) an access-stimulating LEC can choose to be financially responsible for calls delivered to its network so it, rather than IXCs, pays for the delivery of calls to its end office or the functional equivalent; or (2) instead of accepting financial responsibility, an access-stimulating LEC can choose to accept direct connections either from the IXC or an intermediate access provider of the IXC’s choice, allowing IXCs to bypass intermediate access providers selected by the access-stimulating LEC.  Comments are due 21 days after the NPRM is published in the Federal Register and reply comments are due 45 days after the NPRM is published in the Federal Register.

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