As you know, small ILECs are being transitioned by FCC edict to a Bill and Keep of terminating access revenue. By the end of 2019, under this ill-conceived plan, they will no longer be allowed to bill other carriers for terminating calls on their networks.
Back in 2011, the FCC adopted this methodology for traffic exchanged between IXCs (and other carriers) with ILECs, as part of a misguided effort to reduce what it considered arbitrage practices including “traffic pumping and phantom traffic.” The Commission also said in its CAF Executive Summary that the Bill and Keep framework “would encourage the deployment of IP-based networks and reduce artificial competitive distortions between wireline and wireless carriers.”
But what Bill and Keep for terminating traffic actually accomplishes is to arbitrarily take revenue away from some of the nation’s smallest carriers, and give an unfair advantage to some of the largest and most powerful.
Bill and Keep works relatively well when traffic is roughly equal between carriers. It is fine when mutually agreed to by the parties, as part of voluntarily negotiated interconnection agreements.
But as ordered by the FCC, it functions very poorly because one group of carriers — generally the ILECs – can terminate far more traffic from IXCs and others than those entities terminate in return. In the case of such one-sided traffic, the FCC-mandated prohibition against billing the terminating carrier creates a revenue shortfall, to the great detriment of ILECs.
As implemented by the FCC, Bill and Keep is not an efficient, even-handed billing system for small, rural ILECs. Rather, it seems more like a punishment.
