New FCC Ruling Delays Default Bill-and-Keep Compensation Rule for Wireless Traffic; Modifies Universal Service Rules to Force Low Income ETCs to Seek Forbearance

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On Friday, Dec. 23, the FCC changed the rules governing universal service and intercarrier compensation that it had just issued on Nov. 18, 2011. We reported on the earlier order here and here. In a setback for wireless carriers, the FCC pushed out the effective date of “default” bill-and-keep compensation for wireless traffic from Dec. 29, 2011 to July 1, 2012. And the FCC tightened up the new definition of services supported by the universal service fund in a way that will require many carriers focusing on providing service to low income consumers both to seek additional regulatory approvals and (likely) to forgo “Link Up” funding presently used to support the costs of initiating service for a new customer.

Wireless Bill-and-Keep

The FCC’s new intercarrier compensation regime includes a large number of different provisions intended to transition current compensation rules to a new unified bill-and-keep regime over a multi-year period, while also providing some relief to incumbent local exchange carriers (LECs) who today rely on high payments from other carriers terminating traffic on their networks. The amount that a carrier can recover via the new relief mechanism (called the “access recovery charge,” or “ARC”) is to be based in large part on how much intercarrier compensation revenue a carrier loses, starting as of July 1, 2012. But the FCC originally stated in its November 18 order that wireless carriers were entitled to a “default” bill-and-keep regime starting on Dec. 29, 2011.

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