[IP] facts on more on Cell Phone Controversy in Winthrop
Begin forwarded message:
From: Gerry Faulhaber <gerry-faulhaber@xxxxxxxxx>
Date: August 15, 2004 10:52:45 AM EDT
To: dave@xxxxxxxxxx
Subject: Re: [IP] more on Cell Phone Controversy in Winthrop
Some facts about the rules regarding termination of calls (cell and
others)
by incumbent wireline carriers:
Federal (FCC) and state regulators *require* all wireline telephone
companies to interconnect with any and all carriers (wireline, wireless
and
long distance). Reason: telephone is a network externalities business,
and
near-monopoly incumbent local exchange carriers (ILECs) could throttle
competition by refusing interconnection.
Traditionally, originating carriers have had to pay terminating
carriers a
fee, generally pennies per minute, for terminating their calls. These
are
governed by interconnection agreements between the carriers, often
constrained by regulators so that near-monopoly LECs don't gouge upstart
competitors (CLECs) or wireless companies. Such negotiations are often
contentious; there is a long history of tricky business practices
associated
with interconnection agreements involving CLECs, long distance
companies,
and ILECs. The FCC has had to step in more than once to halt outrageous
scams.
In the present situation, there are few facts in the IP post to know
exactly
what is going on. Surely, Iowa has approved termination charges in
place
for all carriers. Perhaps the wireless company is simply not paying
their
bills. Or the wireline ILEC doesn't think they are getting paid
enough. In
any case, this appears to be a business dispute, about to spill over
onto
customers. The Iowa regulators are right to step in and prevent the
locals
from disconnecting, but they also must adjudicate this business dispute,
which properly should be decided by the regulators or the courts, not by
unilateral cut-offs of customers.
The responder writes: "I have, however, never seen any suggestion that
they
[wireline companies] should provide the service [termination] for free."
Well, there certainly is. Many have notices that termination charges
are
contentious and subject to strategic gaming, and simply move money
around.
Why not roll the marginal costs of terminating calls (which is
essentially
zero) into the monthly rate we pay for telephone service, and eliminate
intercarrier compensation altogether? And maintain the regulatory
requirement to interconnect/terminate? Then all carriers complete each
others' calls and no complicated intercarrier billing arrangement is
required, and no strategic gaming. This arrangement is referred to in
telephone-ese as "Bill and Keep"; an economic analysis of it is in an
FCC
working paper http://www.fcc.gov/Bureaus/OPP/working_papers/oppwp33.pdf
. I
personally think it's a good idea; in fact, bill and keep is essentially
what the large Internet backbone networks do: they carry each others'
traffic without compensation, on the basis that it is pretty nearly in
balance anyway, so why set up a complex billing system? So there is a
healthy precedent.
Professor Gerald R. Faulhaber
Business and Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
currently on leave at:
Penn Law School, Univ. of Pennsylvania
Philadelphia, PA 19104
----- Original Message -----
From: "David Farber" <dave@xxxxxxxxxx>
To: "Ip" <ip@xxxxxxxxxxxxxx>
Sent: Sunday, August 15, 2004 9:59 AM
Subject: [IP] more on Cell Phone Controversy in Winthrop
Begin forwarded message:
From: Bjørn Vermo <bv@xxxxxxxxxxxxxx>
Date: August 15, 2004 7:20:31 AM EDT
To: dave@xxxxxxxxxx, Ip <ip@xxxxxxxxxxxxxx>
Subject: Re: [IP] Cell Phone Controversy in Winthrop
On Sun, 15 Aug 2004 06:02:44 -0400, David Farber <dave@xxxxxxxxxx>
wrote:
It's a first-of-its kind attempt. A small, local phone company is
trying to charge cellular providers for dialing home phone numbers. If
wireless companies don't comply, the company says it will cut off cell
phone calls to land lines in the town.
What is first about this? Of course mobile operators have to pay
landline operators for call termination, just as landline operators
have to pay mobile operators for calls in the other direction and one
mobile operator charges the other when customers of one mobile operator
call customers of another. This is a decade-old integral part of the
international GSM interoperability. How could it be otherwise? Why
would one operator want to forward calls the other operator gets all
the income for?
Does this also mean that the local telephone company is terminating
long-distance calls from other companies for free?
There have been complaints, both here in Norway and in other countries,
that incumbent monopoly operators have been charging too much for call
termination. This applies both to calls from mobile operators and from
competing landline operators. I have, however, never seen any
suggestion that they should provide the service for free.
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