https://www.channelfutures.com/wp-content/themes/channelfutures_child/assets/images/logo/footer-new-logo.png
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Master Agents
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
    • Diversity & Inclusion
  • MSSP Insider
  • MSP 501
    • Back
    • Apply Now
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • Videos
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
    • Channel Educational Series
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
    • Channel Convergence
  • Resources
    • Back
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Content Resources
  • Awards
    • Back
    • 2021 MSP 501
    • Circle of Excellence
    • Excellence in Digital Services
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • DE&I
Channel Futures
  • NEWSLETTER
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Master Agents
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
    • Diversity & Inclusion
  • MSSP Insider
  • MSP 501
    • Back
    • Apply Now
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • Videos
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
    • Channel Educational Series
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
    • Channel Convergence
  • Resources
    • Back
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Content Resources
  • Awards
    • Back
    • 2021 MSP 501
    • Circle of Excellence
    • Excellence in Digital Services
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • DE&I
    • Newsletter
  • REGISTER
  • MSPs
  • VARs / SIs
  • Agents
  • Cloud Service Providers
  • Channel Partners Events
 Channel Futures

Telephony/UC/Collaboration


What’s Fair?

  • Written by Channel
  • September 30, 1997

Posted: 10/1997

What’s Fair?

FCC Ponders Payphone Compensation Rules in
Wake of Court Remand

"Fair’s fair," as the old saying goes. That’s
not a very enlightening definition in any context. Fortunately,
the circularity of this definition isn’t enough to support policy
arguments. Unfortunately, federal regulators continue to struggle
over trying to figure out what’s fair in compensating payphone
service providers for the costs they incur in originating calls.

Last September, the Federal Communica-tions Commission (FCC)
adopted rules that implement a section of the 1996
Telecommunications Act that requires the establishment of a
"per call compensation plan to ensure all payphone service
providers are fairly compensated for each and every completed
intrastate and interstate call using their payphone."

The new payphone compensation regulations were roundly
challenged by a variety of parties, including CompTel, and on
July 1 the U.S. Court of Appeals for the D.C. Circuit issued a
decision that struck down some of the FCC’s rules while upholding
others. On August 5, the FCC established a pleading cycle to
address the issues that the court remanded to it.

The appeals court rejected the
FCC’s decision to limit the type of traffic subject to
compensation to 800 and access code calls. The court
ruled that payphone service
providers should be compensated on an interim basis for
all 0+ and inmate payphone calls.

The appeals court upheld some of the FCC’s payphone
compensation rules. First, the appeals court upheld the portion
of the Commission’s plan to require interexchange
carriers–rather than callers–to pay compensation to PSPs. The
court agreed with the FCC that carriers–as the "primary
economic beneficiaries" of 800 service calls–should incur
the costs of these calls. Now, however, there is an uncomfortable
amount of uncertainty over the degree to which carriers will be
required to compensate PSPs. Second, the appeals court upheld the
FCC’s decision to require carriers to track payphone calls. This
requirement imposes new burdens on carriers, many of whom have
had to incur significant expenses in the installation of tracking
systems.

Furthermore, the appeals court rejected the FCC’s decision to
limit the type of traffic subject to compensation to 800 and
access code calls. The court ruled that payphone service
providers should be compensated on an interim basis for all 0+
and inmate payphone calls. The court’s instructions to the FCC to
include these types of calls in any new interim compensation plan
means that carriers will pay even more in compensation to
payphone providers.

In its comments filed with the Commission on August 26,
CompTel emphasized that its members do not dispute that payphone
service providers (PSPs) should be compensated for access code
and subscriber calls. PSPs ought to have a fair opportunity to
obtain a reasonable return for the services they provide;
therefore, CompTel does not object to the requirement that all
carriers handling so-called "coinless" calls–access
code or subscriber 800 calls–pay reasonable compensation to the
PSP that originates the call.

Fair compensation
means that the compensation should be based
on the costs incurred by the handlers of the compensable
call.

The appeals court
recognized this when it concluded that the FCC’s
application of a
surrogate (the local coin rate)to coinless calls was
unjustified.

CompTel’s main concern is that the compensation amount must be
fair to all parties: the PSPs receiving it, the carriers paying
it, and the consumers that ultimately must bear the cost of it.
Compensation should not result in the blocking of payphone calls
and a corresponding erosion of the service available from public
payphones. Nor should compensation mechanisms impose unfair
payment obligations on carriers without advance notice and an
opportunity to recover the additional costs they may owe.

The appeals court, in its July 1 remand, recognized that the
costs of all payphone calls are not alike. It found that CompTel
and other parties submitted "solid data" showing that
the costs of local coin calls were higher than the costs of
originating coinless calls.

Now, the FCC must choose a default compensation amount that
reflects only the cost of coinless calls–not the costs of other
calls originated from payphones. Currently, there is no
ready-made surrogate for determining the cost of compensable
payphone calls. Instead, the Commission must consider the costs
of originating these calls, and then set the compensation level
equal to the additional, or marginal, costs created by coinless
calls.

CompTel stated in its comments that, if compensation is set at
the marginal costs of coinless calls, compensation should be less
than 5 cents per call. If compensation for access code and
subscriber 800 calls is set at direct costs, it should be no more
than approximately 8 cents per call. Direct costs would include
not only the marginal costs created by a coinless call, but also
a share of the equipment and payphone line expense attributable
to the usage of the payphone. Such costs would not and should not
include costs resulting from maintenance and site visits
associated with coin equipment and coin collection, neither of
which are needed to originate coinless calls.

Finally, CompTel also stated that the 1996 Telecommunications
Act requires the FCC to adopt rules to ensure fair compensation
for payphone calls. Clearly, carriers are not obligated to pay
compensation in the absence of FCC rules which require it, and
because the appeals court vacated the FCC’s rules, carriers
should not be obligated to make compensation payments until after
the Commission adopts new rules. The FCC lacks the authority to
prescribe compensation payments on a retroactive basis.

Fair compensation means that the compensation should be based
on the costs incurred by the handlers of the compensable call. In
fact, the appeals court recognized this when it concluded that
the FCC’s application of a surrogate (the local coin rate) to
coinless calls was unjustified. In its comments, CompTel asked
the FCC to establish a new default compensation rate that is
based solely on the costs that are incurred in originating
coinless calls.

Even though the appeals court vacated the so-called
"interim" compensation plan adopted by the FCC, CompTel
believes that the fairest approach to compensation payments
dictates that, if compensation is to be paid on a per-phone
basis, the FCC must apportion that compensation equitably among
all carriers.

CompTel also stated in its comments that the FCC actually
misinterpreted the appeals court’s decision when it asserted that
"all of the requirements of the Payphone Orders–including
those portions that were remanded to the Commission–remain in
effect pending further action by the Commission on remand."
To the contrary, CompTel believes that the effect of the court’s
decision is to vacate the FCC’s rules, subject to its authority
to adopt interim rules during the remand or final rules on remand
that remedy the errors identified by the court.

Unless–and until–the FCC takes either of these courses,
carriers receiving compensable calls are not obliged to pay
compensation to PSPs for coinless calls. CompTel joined with
eight other carriers on August 15 and submitted a motion seeking
clarification that the rules have been vacated pending FCC action
on remand.

Thus, the FCC must now revisit this entire issue, including
the question of what will happen upon the expiration of the new
interim period. The new interim plan, moreover, will probably
apply to all interexchange carriers–and possibly to all
carriers–since the appeals court ruled that the FCC acted
arbitrarily and capriciously in requiring payments only from
large carriers for the first phase of the interim plan. Thus, an
interim compensation plan that would have applied only to about
two dozen carriers will now apply even to the smallest companies.
Whether that’s fair or not is a question that can be settled only
in the marketplace.

Kathleen Franklin is Director of Communications for the
Competitive Telecommunications Association (CompTel), the
principal national industry association representing more than
200 competitive telecommunications carriers and their suppliers.
CompTel can be reached at 202/296-6650. Visit CompTel on the
World Wide Web at
www.comptel.org.

Tags: Agents Telephony/UC/Collaboration

Related


  • CwCJ Logo 2020
    Coffee with Craig and James Episode No. 92: Fusion Connect, Master Agent M&A
    We get the inside scoop from Fusion Connect channel chief Rick Ribas and talk mergers with an industry expert.
  • Businesswoman with help sign
    SMBs Need Channel Partners to Help with Long-Term Remote Working
    Research shows UK SMBs need help from partners with their technology investments.
  • Survey says
    Cloud Communications Market Rocked by Microsoft, COVID-19 in 2020
    The perceived competitiveness of Slack and Google slid year over year.
  • Fuel Pump
    Vonage, Oracle, Salesforce Vets to Fuel Talkdesk Partners' Growth
    In the first two months of 2021, reseller partners have extended Talkdesk's global reach.

Leave a comment Cancel reply

-or-

Log in with your Channel Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • Telarus Vet Ends Short 'Retirement,' Will Lead PPT Solutions' Channel Sales Strategy
  • TBI Adds Rival Intelisys Alum, Tech Data, 8x8 Vets
  • 8x8 Joins Microsoft as Westcon Partner to Spur International Growth
  • Granite Unleashes Microsoft Teams Integration, Merged Voice Services

Galleries

View all

6 Ways to Capitalize on Cloud Computing You May Not Have Considered

April 14, 2021

Industry Perspectives

View all

Exercising Your Organization’s Data Loss Recovery Abilities

April 13, 2021

Why MSPs Need to Shift from Cyber Security to Cyber Resilience

April 13, 2021

Why Every MSP Should Consider TCO When Selecting a BCDR Solution

April 9, 2021

Webinars

View all

Top 3 Intel Security Technologies To Help Against Advanced Cybercrime Attacks

April 15, 2021

What to Look For: 2021 Threat Report

April 22, 2021

Health Care and SD-WAN: A Seller’s Guide

April 27, 2021

White Papers

View all

Top Tips: How Resellers Can Leverage Rackspace to Enhance Customer’s Cyber Security Protection with Microsoft 365 Security

March 30, 2021

Top Tips: Optimize Your Microsoft 365 Investment with Rackspace Technology

March 30, 2021

The Smart Approach to Cloud Workload Placement Decisions

March 19, 2021

Upcoming Events

View all

MSP Summit

November 1, 2021 - November 2, 2021

Channel Partners Conference & Expo

November 1, 2021 - November 4, 2021

Channel Evolution Europe

November 30, 2021 - December 1, 2021

Videos and Fastchats

View all

5 Reasons Diversity, Equity and Inclusion Is Important

Five9 Shares Insights on Implementing a DE&I Strategy

April 13, 2021

FASTCHAT: How Fortinet Reduces Complexity Through Networking, Security

March 31, 2021

Strong Customer Experience Needs Strong Partner Experience

December 22, 2020

Twitter

ChannelFutures

.@nvidia showcases #ProjectGrace, its first CPU for AI-capable supercomputer. @NVIDIAGTC dlvr.it/RxhTkj https://t.co/ofUQjKUr0U

April 15, 2021
ChannelFutures

.@DellTech spinning off ownership in @VMware. #cloud #cybersecurity dlvr.it/RxhFwH https://t.co/V3e4QHRJ43

April 14, 2021
ChannelFutures

.@SoftIron launches inaugural VAR program. #datacenter dlvr.it/RxhCgR https://t.co/EKSGPKmLGQ

April 14, 2021
ChannelFutures

Hybrid IT services provider @EnsonoIT announces acquisition by investment firm KKR amid flurry of M&A activity.… twitter.com/i/web/status/1…

April 14, 2021
ChannelFutures

.@Vonage #ContactCenter now includes Visual Engagement, other enhancements. dlvr.it/Rxh20n https://t.co/HDnHjkKMhw

April 14, 2021
ChannelFutures

.@michelleragusa outlines 5 solid reasons why #DE&I is so important — and what you can do to promote it.… twitter.com/i/web/status/1…

April 14, 2021
ChannelFutures

🕑 Set aside time this week complete your @ChannelFutures MSP 501 application > bit.ly/2021-501. Your compan… twitter.com/i/web/status/1…

April 14, 2021
ChannelFutures

.@C_Trapp talks about why he founded Upstack and his goal to build the "best direct sales agency in the country."… twitter.com/i/web/status/1…

April 14, 2021

MSSP Insider

Business advice for MSSPs and news from the broader security channel.

Newsletters and Updates

Sign up for The Channel Report, Channel Futures Update, MSP 501 Newsletter and more.

Live Channel Events

Get the latest information on the next industry-leading Channel Partners event.

Galleries

Educational slide shows and images from live events.

Media Kit And Advertising

Want to reach our audience? Access our media kit.

DISCOVER MORE FROM INFORMA TECH

  • Channel Partners Events
  • Telecoms.com
  • MSP 501
  • Black Hat
  • IoT World Today
  • Omdia

WORKING WITH US

  • Contact
  • About Us
  • Advertise
  • Newsletter

FOLLOW Channel Futures ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X