Kevin Marten, the chairman of the US Federal Communications Commission has proposed changing the rates that US incumbent telcos charge each other for connecting to each other’s customers.
It almost sounds altruistic put like that, but rural telecommunications operators have a charge that is net in their favor, in areas which AT&T and Verizon figure would be uneconomic to build out. Often the amount of money paid by the major incumbents is the only thing that keeps the rural telcos in business. Any government intervention is likely to be net negative to rural phone companies and lead to the rural community suffering prices hikes.
Interconnection fees almost always need regulator intervention in the first place but should be revised as few times as possible, and in Europe recently there have been strong actions to reduce cellular interconnection charges but these had been charged directly to the consumer. Detractors of that move said this would end up making cellphone charges higher, which of course did not materialize. However the smaller European operators when they attached to the giants like Vodafone and T-Mobile were paying through the nose for it. In the US among fixed rural operators it is the other way around.
Supporters say the reforms can be used to fund broadband access for rural America, which others can see the move just raising the price of telecommunications, especially in rural areas.
Like all things US, it is never just a single issue, instead the intercarrier compensation charges will be bound up with a reduction in long distance phone calls, and a new government charge to add to the universal service fund, the fund that is tapped to offer everyone everywhere equal telecommunications, with a $1 tax on devices. Marten is also bundling this all up with the raising of the cap on monthly line rental from $6.50 to $8 or $8.50.
This is all fiddling while Rome is burning. Consumers will end up paying their local incumbent more for the line, and the rural incumbents will lose that money in reduced connection charges straight to AT&T and Verizon, making it a double whammy for US big business before the new president is in power. Not see through at all. The chairman’s paper will be voted on in early November.