Margo Reyna
Regulatory Analyst
Enron Corp., Government Affairs
Phone:  713-853-9191

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		 Subject: Telecommunications Regulations: U.S.: FCC May Phase Out Phone Fees 
Paid by Local Telephone ...



FCC May Phase Out Phone Fees Paid by Local Telephone Companies 
  
12/04/2000 
Dow Jones Business News 
(Copyright (c) 2000, Dow Jones&Company, Inc.) 
WASHINGTON -- In a boost for the Baby Bells, the head of the Federal 
Communications Commission said he hopes his agency soon will approve a plan 
to gradually eliminate the billions of dollars of fees local telephone 
companies pay each other to complete calls, The Wall Street Journal reported 
on Monday. 
FCC Chairman William Kennard is circulating among the other four 
commissioners a plan to phase out the fees over three years. He said details 
are being negotiated, but the plan would set a formula to determine if call 
traffic -- and therefore the fees -- is going disproportionately from some 
local phone companies to others, in particular those carrying many calls to 
an Internet services provider. 
The phaseout plan would cap temporarily the number of calls one phone company 
must pay when another completes calls from the first company's customers, the 
Journal reported. After the phaseout period, the fees would be eliminated. 
Companies competing with the Bells that carry a lot of traffic to Internet 
services providers include Pac-West Telecomm Inc., Stockton, Calif., and 
Focal Communications Corp., of Chicago. 
Baby Bells would prefer an immediate elimination of the fees, since the Bells 
pay a disproportionate amount of them, but officials say they could live with 
the fees being phased out. 
Mr. Kennard told the Journal that the plan to eliminate the fees was prompted 
by the explosion of competitive local phone companies living off the fees by 
carrying calls to Internet services providers. States would be given 
flexibility in adopting the fee elimination, if the FCC approves it, he said. 
They wouldn't be obligated to accept it if they already had a fee system that 
worked well. 
Originally, the fees, known as reciprocal compensation, were adopted at the 
behest of the Bells and other incumbents. They were supposed to benefit the 
incumbent phone companies, because customers of competing local phone 
companies were calling their customers and therefore increasing the traffic 
on the incumbent's phone network, the Journal reported. 
But then competing phone companies were set up, and their business included 
serving Internet services providers, which accept calls but don't make them. 
Under the fee system, that one-way traffic tends to work against the Baby 
Bells. The competing companies have said that if the fees were cut, it would 
cause a hike in Internet access costs, because they would have to charge more 
to carry the calls. 
Mr. Kennard said he hopes for a decision on the plan before year end. 
Copyright (c) 2000 Dow Jones&Company, Inc. 
All Rights Reserved. 

Folder Name: Telecommunications Regulations: U.S. 
Relevance Score on Scale of 100: 68

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