Continuing the trend to move all intercarrier compensation to bill and keep, the FCC issued an Order late last week that moves originating 8YY traffic compensation to bill and keep for end office switching and sets caps for other rate elements. This Order, which applies to both Price Cap carriers and Rate of Return carriers, is meant to eliminate arbitrage and mileage pumping associated with 8YY traffic. This Order will apply to both interstate and intrastate rate elements.
Under these new rules:
- Companies must create separate originating rate elements for end office switching, tandem switched transport elements, and tandem switching specifically for 8YY traffic;
- The 8YY originating end office switching element will remain the same or reduce to the federal rates in 2021 and phase down to zero by July 1, 2023;
- The 8YY originating transport between the end office and the tandem rate elements will be combined with tandem switching rate elements into a single rate not to exceed .001 in July 1, 2021; and
- The query charge may only be charged once per call and must not be more than .004248 effective July 1, 2021, with phase down to .0002 by July 1, 2023.
Separating the access rate elements for 8YY may be difficult for companies’ billing systems. Companies are encouraged to start looking now on how they will bill these new rates.
In the interstate jurisdiction, where the FCC believes the majority of the 8YY traffic resides, there will be no revenue impact on LECs because the revenue is included in ICC payments. The ICC payments are fixed at a specific level; when the revenue is not collected by the carrier the difference is covered by the ICC support. However, it will be up to the states to address the revenue shortfall caused by these rate changes in the intrastate jurisdiction.
The Order will be effective 30 days after it is published in the Federal Register. However, no tariff filings are required until the annual tariff filing effective July 1, 2021.
If you have any questions, please contact Valerie Wimer or Marty Kluh at 301-459-7590 or Ryan Denzel at 651-452-2660.