Switched access charges have existed since 1984, and for those of us who get paid to analyze it, it has been an absolute joy! Since their creation there has never been a week when carriers were not disputing the correct access rates or their applicability in various scenarios. That is primarily because of the millions of dollars involved, but also because switched access rates have traditionally been priced well above cost to support universal service and rates differed between the interstate and interstate jurisdictions. When new technologies arrived such as VoIP, the rules became even more complex and attempts to arbitrage the artificial differences in rates became more numerous.

Thankfully, several years ago the FCC equalized interstate and intrastate access rates and began transitioning terminating switched access rates to bill-and-keep. Since then the access disputes and arbitrage attempts have lessened. However, as CenturyLink (CTL) details in a new Petition for Declaratory Ruling (Petition) filed with the FCC on May 11, 2018, there remain grey areas that lead to carrier disagreement. The latest dispute concerns the applicability of switched access end office local switching charges for the traffic carried by "over-the-top" VoIP providers. Over-the-top means that the VoIP service rides a network that is not owned by the VoIP provider itself. 

In its Petition, CTL requests the FCC to; 

terminate a controversy or remove uncertainty by issuing a declaratory ruling as to the applicability of end office local switching access reciprocal compensation, under Section 51.913 of the Commission’s Rules, for traffic that originates from or terminates to an end user customer of an “over the top” Voice over Internet Protocol (“VoIP”) provider that partners with a local exchange carrier (“LEC”) to exchange traffic to and from the public switched telephone network (“PSTN”). (CTL Petition for Declaratory Ruling, FCC Docket 10-90, filed May 11, 2018, p. 1).

CTL notes that there are ongoing disputes about this issue that would be better served with an industry-wide solution rather than through case-by-case complaints. These disputes generally involve the VoIP provider partnering with a CLEC. For example, 

Teliax, Inc. is a Denver, Colorado-based CLEC providing voice and data services to both retail and wholesale customers, including toll-free origination service. Teliax charges originating end office tariff rates for services performed in connection with its provision of 8YY origination. But AT&T has refused to pay Teliax’s tariffed rates for originating end office local switching and instead pays Teliax its national average tandem switching rate. As a result, Teliax has sued AT&T in federal district court in Colorado. 

Similarly, Peerless Network, Inc., whose operating subsidiaries are CLECs, offers end office local switching access service, including for “over the top” VoIP partners. Verizon, however, has refused to pay Peerless’s tariffed end office switched access rate, arguing that the service provided by Peerless is not end office local switching. Peerless has also sued and both matters have been referred to the Commission under the primary jurisdiction doctrine. (Id., pp. 3-4).
According to CTL, the transition to bill-and-keep has not mitigated this issue:

First, although terminating access reciprocal compensation charges for end office local switching are now at bill-and-keep for price cap carriers, terminating end office access reciprocal compensation charges from periods prior to July 1, 2017 remain in dispute. 

Second, for rate-of-return LECs and for rural CLECs, terminating end office access reciprocal compensation charges remain until July 1, 2020. 

Third and finally, this dispute remains with respect to originating access reciprocal compensation, particularly for toll-free (8YY) traffic in which the IXC is billed for originating access reciprocal compensation, including, when applicable, end office local switching, by the originating LEC. 

The Commission has not yet embarked on any further reform of originating access reciprocal compensation, whether for 8YY or more generally. CenturyLink needs clarity as to its proper payments or receipts in all of these settings. (Id., p. 3)

Not surprisingly, CTL offers the Commission a preferred solution to end local switching disputes. 

CenturyLink continues to believe that the proper interpretation of these rules as applied to VoIP traffic exchanged with the PSTN is that they permit a LEC partnered with a VoIP provider to collect end office local switching access reciprocal compensation when the LEC and/or its VoIP partner perform certain critical call initiation or termination processes...irrespective of whether the VoIP provider also controls last-mile facilities used to reach the VoIP provider’s end-user customer. (Id., p. 2).

Of course, even if the Commission provides clarity for over-the-top VoIP service, switched access charge disputes will continue until all inter-carrier compensation moves to a bill-and-keep environment. That is why sooner or later, the FCC will have to address originating access and 8YY calls. At this point, almost everyone in the industry hopes its sooner.