Level 3's VoIP Forbearance Petition Withdrawn
Level 3 has withdrawn its forbearance petition on VoIP access charges the day before the FCC was required to rule. Light Reading had reported last week that sources close to the Commission were saying that the FCC was going to deny the forbearance request rather than letting the deadline pass, though they may have issued a subsequent ruling further exempting VoIP from access charges.
Currently, VoIP calls are not subject to any access charges due to an Enhanced Service Provider exemption. Had the forbearance request been denied, carriers would have been required to pay switched access charges for VoIP. Switched access charges are paid to the local exchange carrier for calls sent to, and calls received from, the LEC; the average price of switched access is around 1.2 cents per minute for interstate calls and about 1.8 cents per minutes for intrastate calls.
Level 3 maintains that VoIP calls should be subject to reciprocal compensation charges, under which the interconnecting carrier pays for calls sent to a LEC, and receives payment for calls received from a LEC. The average price per minute for reciprocal compensation is about 0.1 cents.
It seems that with the clock running, Level 3 felt that the FCC would potentially reach a decision unfavorable to them and the VoIP industry. Withdrawing the petition allows things to continue in their current state of uncertainty, which for VoIP carriers is certainly preferable to an unfavorable FCC ruling with a possible future rule change.
The carrier switched access charge structure was originally developed at the time of the AT&T divestiture to compensate local exchange carriers for the cost of "exchange access", connecting users' telephone lines to interexchange carriers' networks. It was an implicit subsidy mechanism; rates were set more than an order of magnitude higher than rates for interconnection of geographically-adjacent local exchange carriers (e.g., a Bell company and an independent telco). Switched access charges have come down significantly since divestiture; however, they are still more than an order of magnitude higher than reciprocal compensation charges, which generally tend to be more reflective of the actual cost of interconnection.