The Local Switching Battle Between CLECs and AT&T Heats Up
October 10, 2014 | by Andrew Regitsky
The long-time argument between AT&T lately joined by Verizon on one side and CLECs, such as Level 3, on the other regarding when local switching switched access charges can be assessed is once again heating up at the FCC. Level 3 has requested the Commission to issue a declaratory ruling affirming that a CLEC, working with an over-the-top Voice over Internet Protocol (VoIP) provider serving end user customers, may assess end office local switching charges on long distance calls when it performs the core functions of a local switch but does not connect to a physical loop dedicated to a specific end user.
This could be a very significant case. The money involved is considerable, since years of “unpaid” local switching charges assessed on switched access minutes by CLECs have been piling up. That is why AT&T recently told the Commission that if they were to declare that long distance providers must pay CLECs local switching charges for “over-the-top” switched access minutes, it should declare that the charges apply on a going forward basis only.
There is also a fundamental principle involved. If companies can assess access charges when they provide the “intelligence” for an access function, but not the function itself, one can easily imagine an entire industry developing in which CLECs and VoIP providers provide functional switched access and obtain access revenues.
This trend could be exacerbated with the popularity of over-the-top VoIP providers. Over-the-top VoIP, or "nomadic" VoIP, is defined as a service that is owned and offered separately from a specific broadband connection to the public switched telephone network (PSTN) and operates with any broadband connection.
The current dispute between the carriers began in 2012 when the FCC stated that a LEC could not levy access charges for functions that are not performed by either the LEC itself on an unaffiliated VoIP partner. That statement has been used as justification by AT&T to refuse to pay local switching charges to Level 3 and Bandwidth.com for the call management services those CLECs perform on PSTN-VoIP calls sent to subscribers of Internet VoIP services who obtain broadband Internet connectivity from a third-party Internet Service Provider (ISP).
The CLECs claim that the functions they provide – providing the intelligence and infrastructure that manage the interaction with the end user’s telecommunications or VoIP provider and that initiates call-set-up or call takedown - are the functional equivalents to end office switching, and access charges should apply.
AT&T vehemently disagrees and has argued instead that because the over-the-top customer is not served by a dedicated loop, Level 3 and its VoIP partner are not connecting a trunk and a loop, and thus are not performing the core function of an end office switch. Level 3 responds however that this makes little sense. For if it serves a Time Division Multiplexed (TDM) loop, a cable telephony loop and an over-the-top VoIP customer from the same switch, according to AT&T and Verizon, it can only assess end office local switching access charges for the TDM loop-bound and cable telephony loop-bound traffic, but not for the identical functions performed for traffic bound for the over-the-top VoIP customer.
Regardless of which side ultimately wins, with this dispute simmering since 2012, it is high time for the FCC to begin an investigation into this issue. However, there is no indication that the Commission will begin such a proceeding. No one should be surprised! This problem is symptomatic of the Commission’s entire approach to the transition to an IP network, which has been haphazard and in my opinion, totally unsatisfactory. Just name the issue. Whether it is developing rules for IP interconnection, determining the IP service replacements that will be available for wholesale providers as TDM services such as special access are eliminated, or determining the rules for the retirement of copper services, the Commission has failed to act. The failure to develop rules is increasingly putting CLECs in jeopardy as they must transition to the new telecom environment without a clear set of regulations while trying to negotiate with ILEC competitors who are also their suppliers. Clearly, this is not a formula for long-term success.
By Andrew Regitsky, President, Regitsky & Associates
