Google took the opportunity last week to weigh in on the Universal Service and inter-carrier compensation debate. Several Google representatives met with several FCC representatives, following up later with a letter to the FCC to recap the highlights of the meeting and outlining Google’s views on USF reform.
Google has almost nothing to do with Universal Service or inter-carrier compensation today—and apparently the company hopes to keep it that way. But the FCC is considering the possibility of requiring VoIP providers to pay per-minute access charges—and although Google’s Google Voice offering isn’t exactly VoIP, there has been speculation that the offering will evolve in that direction.
Not surprisingly, Google is advocating a low .0007 cent per-minute ICC rate, which the company said “could represent a sensible starting point in a transition to a bill-and-keep regime.” (In a bill-and-keep regime carriers agree to exchange traffic to one another’s customers at no charge.)
In its letter, Google expresses concern that the FCC might impose access charges on “all forms of IP traffic exchange in order to retain per-minute access charges for voice minutes.” But I don’t see how that would be a danger, except perhaps when calls are carried in IP form end-to-end, such as when two VoIP providers exchange traffic using IP peering.
Rural customers, however, typically are not served via VoIP. Instead calls to them terminate through the public telephone network, where they are separated out from non-voice IP traffic the VoIP provider also might be delivering to that customer.
As Google notes, the .0007 cents per minute rate has received a lot of attention since Verizon and Bandwidth.com inked a deal at that rate several months ago. But .0007 cents per minute is a lot less than most rural telcos are accustomed to receiving for terminating calls to their customers. Those rates often are several cents per minute because rates are designed to help rural carriers recover some of the costs of delivering service in their sparsely populated serving areas, where costs are higher than in metro areas.
And although some VoIP providers are not paying per-minute access charges, arguing that VoIP calls are exempt, others are paying the regular rate. Windstream, for example, estimates that the providers generating two-thirds of VoIP calls to Windstream customers are paying the regular ICC rate. If the FCC sets a special lower access charge rate for VoIP providers, Windstream argues that its access charge revenues will actually decrease.
Rural carriers also have expressed concerns that if VoIP providers get a per-minute access charge that is lower than the rate for traditional calls, then all carriers will have an incentive to incorrectly classify regular voice traffic as VoIP so they can pay the lower rate.
The FCC hopes to reform the USF and ICC programs with the goal of minimizing per-minute access charges–perhaps by creating an access charge replacement fund. But those reforms are likely to take several years to phase in. Until then, rural telcos argue that VoIP providers should pay the regular access charge rate.
Some rural carriers also have advocated expanding the base of companies that must pay in to the Universal Service Fund to include companies such as Google. The carriers argue that those companies benefit from being able to reach rural Americans and should help foot the bill for providing service to high-cost areas.
Interestingly Google didn’t say much about that possibility in its letter. Perhaps that means someone at Google knows the FCC isn’t seriously considering the small telcos’ recommendation.