FCC’s New Proposed Rules Would Apply Traffic-Pumping Triggers to VoIP Providers

Access charges are the fees local exchange carriers (LECs) charge long distance carriers (inter-exchange carriers, or IXCs) to originate or terminate the IXCs’ customers’ calls. These have been the subject of disputes ever since the breakup of Ma Bell in 1984. For over a decade now, the disputes have centered on a practice known as access stimulation (also called traffic pumping or access arbitrage). This arbitrage became possible because, over time, the rates for access charges became disconnected from the costs of providing the service, with rates far exceeding costs. That mismatch created an incentive for some LECs to make arrangements with entities that offered high-volume calling services (e.g., “free” chat lines, “free” conference calling) to route (“pump”) large volumes of long-distance traffic to their partner LECs’ switches for termination. That enabled the LEC and service provider to split the profits from the high access charges paid by the IXCs sending all that traffic to be terminated (far more traffic than would ever occur with normal customers and calling patterns).

The FCC found such schemes harm consumers by increasing IXCs’ costs and rates. It therefore sought to prevent them in a 2011 order and rules (26 FCC Rcd. 17663), and again in an order and rules in 2019 (34 FCC Rcd. 9035). The 2019 Order adopted certain “traffic ratio triggers,” which classified a LEC as an unlawful traffic pumper if its interstate terminating-to-originating traffic ratio was too high (meaning it was terminating vastly more long-distance traffic than it originated). A traffic pumper cannot recover terminating access charges...