Understanding the FCC Approach to ICC Reform

Twelve days after the Federal Communications Commission voted to adopt an order to transition today’s voice-focused universal service plan to focus instead on universal broadband, the order has not yet been released to the public. While stakeholders contemplate what’s up with that, we thought we’d take the opportunity to provide a run-down on the access charge recovery mechanism outlined by the FCC at the time the order was adopted. That’s a task that was too complex to undertake as part of our initial reporting on this topic, but which we promised we would get to. Access charges, also known as inter-carrier compensation (ICC), are the per-minute fees that carriers pay to one another for terminating voice traffic to each other’s customers. In many rural markets, these charges tend to be proportionately higher than in urban/metro areas to help cover the high costs of building and maintaining communications networks in those rural areas. But the access charge system has become increasingly less viable as a means of recovering network costs as more and more customers opt to go wireless-only. In addition, high access charges in rural areas have given rise to a range of avoidance schemes— including the particularly alarming and increasingly used option of not terminating calls to those areas at all. For these reasons, the FCC’s Universal Service reform order calls for phasing out per-minute access charges over the next five to nine years and creating a recovery mechanism so that carriers can still collect at least part of the funding they would otherwise have obtained through the access charge system.