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Where is the FCC Going and Will it Be the Final Answer? The Future of Intercarrier Compensation

Where is the FCC Going and Will it Be the Final Answer? The Future of Intercarrier Compensation James Mertz Director of Government Affairs. Today intercarrier compensation and Universal Service Funding are linked

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Where is the FCC Going and Will it Be the Final Answer? The Future of Intercarrier Compensation

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  1. Where is the FCC Going and Will it Be the Final Answer? The Future of Intercarrier Compensation James Mertz Director of Government Affairs

  2. Today intercarrier compensation and Universal Service Funding are linked • Intercarrier compensation consists of the charges that one carrier charges another carrier for traffic on their network (originating, terminating or transiting) • Intercarrier compensation consists of interstate & intrastate switched access charges, reciprocal compensation and transit charges

  3. Historically, the purpose of Universal Service Funding is to insure the affordability of POTs for rural and less dense areas • USF Funding has a long history of being accomplished using long distance revenues • Before Divestiture in 1984 there was the Division of Revenues – AT&T’s LD revenues were shared among the Bell System Companies and Independent Companies

  4. At Divestiture interstate and intrastate switched access charges were established to fund universal service • Long distance service is no longer priced where it is an option for continuing to provide USF funds • LD is no longer a stand alone service – it is often priced on an all you can eat basis

  5. The two major questions about USF are “What’s the next source of funding?” and “How soon will it be required?” • When the two major USF questions are answered the issues surrounding intercarrier compensation will come into focus and a final answer can be developed. • Intercarrier compensation reform will not be achieved in 2005 and is unlikely to be achieved in 2006

  6. Network interconnection between companies is of major importance to more than just telephone companies (i.e. ISPs, VOIP providers, Cable Co. & Wireless Co.) • Network interconnection should be technology neutral and should not favor legacy networks over networks of the future • Any proposal for intercarrier compensation reform that does not address USF reform is only temporary • Should Universal Service Funding be expanded to include the deployment of broadband in rural or less dense areas?

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