October 27, 2006

Intramural Disagreements

Only recently both Tom Evslin and Alec Saunders wrote about the anomalies of Inter-carrier compensation scheme in US, when they talked about FuturePhone. Readers of these pages may remember that many “virtual number” offerings are based on the ICC regimen. As you recall, when a carrier delivers a call to another the recipient gets compensated. (By the way doesn’t this suggest that the carriers must give Call waiting for free, thereby increasing their revenue due to termination charges?) Apparently FCC has issued for comment a reform plan called the “Missoula Plan” that was filed by National Association of Regulatory Utility Commissioners’
Task Force on Inter-carrier Compensation and supported by AT&T, BellSouth and many of the carriers serving rural areas. (If you have read Tom and Alec, you will know that rural carriers benefit enormously from the existing scheme). What is interesting is that Verizon opposes the proposed reform. There is a news report that states that Florida Attorney General also opposes the plan quoting that the charges to the consumer will go up about $3.50 per month because the plan shifts the full burden of these charges to the local customers. My translation: these charges are collected per phone number and not based on the usage. If I am correct, then I would think companies like FuturePhone need to revisit their business plan because driving traffic to their local network will not increase revenue. Also many of the “free phone number for life” offers may disappear. Finally, I think that the proposed reform comes close to “bill and keep” scheme suggested by Tom. I hope he weighs in on this.

Posted by aswath at October 27, 2006 03:48 PM
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