The FCC today adopted an access arbitrage order aimed at preventing service providers from pumping traffic to certain phone numbers to generate access charges. It’s an issue that the commission addressed previously in 2019, but abuses of the system have continued because traffic pumpers found a loophole.
As Commissioner Nathan Simington put it at today’s monthly commission where the order was adopted, “It seems like you whack one of these down, and another one pops up in its place; we have to keep whacking.”
Access arbitrage exploits rules for exchanging voice traffic that are aimed at enabling service providers in rural areas to keep the price for their services comparable with those in urban areas. The rules call for long-distance carriers to pay access charges to local carriers that provide voice service in rural areas for terminating calls to their customers.
As the FCC explains in a press release, some local carriers have made deals with “free” conference calling services or other entities that generate a high volume of calls and have shared in the local carrier’s access charge revenues.
In 2019, the commission put rules in place preventing local carriers from collecting terminating access charges if the number of calls to that carrier exceeded the number of calls from that carrier by a certain percentage.
Since then, however, some companies have attempted to avoid complying with the spirit of those rules by making deals with internet protocol enabled service (IPES) providers to take calls from the traffic pumper and send them to the local carrier.
The rules adopted today require IPES providers to calculate the ratio of their terminating and originating call volumes, just as local exchange carriers are required to do.
As the FCC explains in a fact sheet accompanying a draft of the order, “if the IPES provider’s traffic ratio meets or exceeds the triggers established in the existing access stimulation rules, it would be deemed to be engaged in access stimulation.”
If so, “the intermediate access provider would be prohibited from collecting tariffed terminating switching and transport charges from a [long-distance carrier] for traffic bound to the access-stimulating IPES provider or its customers.”
The cost of the access charges is ultimately paid by customers of the long-distance carriers that handle calls made to the traffic pumpers, including those who don’t use the free conference calling or other services.
In her comments about the order at today’s meeting, FCC Chair Jessica Rosenworcel said, “As complex as this is, our goal is simple – to make the system fairer and more efficient for everyone who pays a phone bill.”