SBC Blasts Level 3's VoIP Proposal

The Internet telephony carrier is accused of seeking a self-serving quick fix to interconnection fees.

By Roy Mark | Posted Feb 4, 2005
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SBC says Voice over IP provider Level 3 is attempting to gain an unfair regulatory advantage in its effort to avoid paying access fees for IP traffic that interconnects with the public switched telephone network (PSTN).

In a letter sent Thursday to Federal Communications Commissioner (FCC) Michael Powell and obtained by internetnews.com, SBC Senior Vice President James C. Smith wrote that Level 3 is seeking a "quick, self-serving fix" to avoid the "lawful assessment" of access charges.

In December 2003, Level 3 filed a forbearance petition with the FCC to reaffirm that VoIP providers should be charged a lower "reciprocal compensation rate" when connecting to the PSTN rather than the higher access charge assessed when long distance and wireless carriers touch the Bell legacy copper network.

VoIP providers are currently paying the lower reciprocal rate while waiting for an FCC decision. If the FCC does not rule on the petition by the statutory deadline of March 22, the petition will be deemed granted.

The lower reciprocal rate applies only to "information services" as defined by the FCC. The agency is currently conducting a review of all IP-based services, but it has not legally defined Internet telephony as an information service.

Further, SBC claims, IP networks are charging other carriers the full access charge when connecting a PSTN call to an IP network.

"Level 3 is able to collect access charges from wireless providers and long distance providers," Smith wrote. "Level 3 is now asking the FCC to sanction this one-sided arrangement so Level 3 and similar carriers can officially eliminate their obligations to pay access charges for VoIP-to-PSTN calls, but maintain their ability to receive access charges for PSTN-to-VoIP calls."

Level 3, which criticized the access charge as a "compelled subsidy" in a Wednesday interview with internetnews.com, declined to comment on the new SBC accusations until it had time to review Smith's letter to Powell.

"The absurd result of Level 3's petition would be that PSTN-based customers who purchase wireless or traditional long distance service would be forced to subsidize Level 3 and other CLECs (competitive local exchange carriers) that do business with VoIP providers," Smith wrote in his letter.

The war of words between Level 3 and SBC is part of a larger proceeding at the FCC aimed at modernizing the rules for exchanging traffic between networks. The federal courts have already ruled that the old tariff system on phone calls is stifling competition.

A group of nine carriers known as the Intercarrier Compensation Forum (ICF), which includes SBC and Level 3, has submitted a proposal to the FCC for new interconnection rates to update the nearly 20-year-old system. In Thursday's filing with the FCC, SBC urges the agency to reject Level 3's petition until the ICF proposal is fully reviewed.

"With its imprudent ... petition, Level 3 seeks to jump ahead of the commission on intercarrier compensation reform by obtaining a quick, self-serving fix on one intercarrier compensation issue without the slightest regard for how such piecemeal relief would complicate resolution of all the other issues to which this one issue is inextricably tied," the SBC letter states.

The SBC letter asks the FCC to turn "its full attention to the holistic reform proposals that SBC and Level 3 are advocating in the ICF plan."

Michael Balmoris, SBC's executive director of public affairs, said, "We believe that the current system must be reformed, but until that time, everyone must play by the same rules."

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