The September 5 draft Order on eliminating access arbitrage is the FCC’s latest effort to address what is also known as “access stimulation”, and they made little effort to hide their true feelings on the issue. While their intent when it comes to certain business plans seems quite clear, some new provisions in the proposed order could lead to unintended outcomes and impact service providers who are far removed from any activities typically regarded as access stimulation.
In particular, the new 6:1 “trigger” declares that any CLEC (or rate of return carrier) serving end users that has an interstate terminating-to-originating traffic ratio of at least 6:1 in a calendar month is an access stimulator. Not “may provide evidence that…” or “creates a rebuttable presumption that…”. Such a carrier may have never engaged in revenue sharing or even facilitated a single conference call. But under the new definition, that carrier is an access stimulator. Attention all CLECs and RLECs – do you know what your terminating-to-originating traffic ratio is?
So what -- why do I care if I’m labeled an access stimulator? Well, a couple of things will happen. First, any remaining tandem or transport access charges you are billing must stop. Second, any third-party tandem or transport provider delivering that traffic to you must also stop billing the IXCs handing off that traffic – and they will instead bill those charges to you, the newly-identified access stimulator!
Again, the FCC’s intent is to identify true “access stimulation”. They say “a 6:1 terminating-to-originating traffic ratio provides a clear indication that access stimulation is occurring” and “The 6:1 ratio on its own should help to capture any access-stimulating LECs.” This may be true, but will it “capture” anyone else? It almost certainly will.
There are many reasons why a terminating to originating access minute ratio might exceed 6:1 that don’t involve access stimulation (e.g., LCR outbound traffic that is not billed originating access). In fact, according to data filed by the price cap LECs, they often have terminating to originating ratios that exceed 4:1 right now. Is Verizon involved in access stimulation to have a filed a terminating to originating ratio of 4.3:1 in its last Tariff Review Plan submission? I’m also hearing lots of questions about what kind of traffic this trigger includes and how it is measured. The Order just does not offer that kind of detail. (The order behind the existing 3:1 and growth triggers didn’t either, but at least it was combined with a revenue sharing trigger and the consequences were not nearly as extreme.) NTCA, one of the commenters in the proceeding, warned about creating any new definitions that might cast too wide a net, but their concerns were dismissed in the draft order with the observation that “NTCA offers no data or examples to demonstrate that there are LECs not involved in access stimulation that have traffic imbalances so extreme as to meet or even come close to the 6:1 ratio.” Now that the FCC did exactly what NTCA warned about, NTCA submitted data that 4% of rural LECs – LECs that have no involvement with access stimulation practices -- would trip the new trigger and be defined as access stimulators.
The FCC issued the NPRM in June of 2018. Many parties have submitted comments, reply comments, and ex parte communications over the course of the proceeding. The proposed 6:1 trigger made its first appearance in an April 2019 ex parte presentation by Inteliquent, but it was coupled with other triggers and other triggering consequences – it was not proposed as a supplementary, “no other considerations necessary” trigger. Then, last Thursday, the FCC circulated the draft Order which gave interested parties less than two weeks to speak now or forever hold their peace. CLECs and RLECs are advised to review this situation quickly (the last date for any feedback is September 18) and see if they should voice any concerns.
The public policy issue they are attempting to address, initially in the 2011 CAF Order, in various subsequent orders, and now in this NPRM, has a well-developed record with contributions by dozens of interested parties. In contrast, the draft Order looks like a rushed, eleventh-hour remedy that too easily disregards a number of well-reasoned warnings and proposed solutions.