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TC 310 June 4, 2008. Fixing Intercarrier Compensation. Review of Problems. Arbitrage Unstable compensation. Solution. Unified Compensation Two Contenders CPNP: Cost based, not implicit Bill-and-Keep. Terminating Access Monopoly. Effective solution must always prevent this
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TC 310 June 4, 2008 Fixing Intercarrier Compensation
Review of Problems • Arbitrage • Unstable compensation
Solution • Unified Compensation • Two Contenders • CPNP: Cost based, not implicit • Bill-and-Keep
Terminating Access Monopoly • Effective solution must always prevent this • Ex. No access rate caps on CLECs • Non-dominant, abuse this until 2001 • No recourse (can't send to customers) • “Bad” companies win customers
Solution 1No Regulation • Deny Interconnection • Dependable telecommunications too important
Solution 2Competitive CPNP • Same scheme, new measure of cost • Need to get costs right • Same problems if costs “wrong”
Solution 3Bill-and-Keep • Responsible for own network traffic • Regulators define interconnection points • Ultimately leads to less regulation
Problems with Bill-and-Keep • Calling party causes costs • Create incentive to originate calls • Where is connection point?
Authority ProblemsImplementing Bill-and-Keep • 1996 Act problematic • Jurisdiction • Authority interpretation
Political Problems • National policy ruffles State feathers • Conflicting interest groups • Some customers pay • Explicit Subsidies necessary