2 April 2013

Last week, analysts began to discuss future regulatory measures for interconnection between VoIP and other telecom service providers. Interconnection refers to the process of sending a call through multiple networks. That is, a provider takes a call that originates on their network and transfers it through another provider’s network to reach its destination. A user with provider A would not be able to call a user with provider B without interconnection.

A group of four trade associations, the American Cable Association, Competitive Carriers Association, COMPTEL, and the Computer and Communications Industry Association, wrote a letter on March 21st to the FCC. In the letter, these four trade groups urged the FCC to ensure incumbent local exchange carriers (ILECs) to abide by current interconnection regulations when switching from traditional phone service to VoIP.

Interconnection Regulations and VoIP

Currently, VoIP providers and ILECs have negotiated “good faith” interconnection agreements whereby the VoIP providers pay a modest fee for using the ILEC’s network, and the ILEC promises not to price gouge. However, if these interconnection regulations did not apply to IP networks:

- ILECs would be able to fix prices for interconnection, charging more for smaller providers to use their networks.

- The VoIP market might soon resemble the “Ma Bell” era, when several big companies controlled the majority of phone service.

- Smaller providers would be discouraged from entering the market by high prices.

The group believes that providers like AT&T and Verizon (two of the larger ILECs in the telecommunications market) are not likely to follow interconnection regulations with VoIP. They can see ILECs saying that because VoIP uses IP networks not phone lines, the interconnection regulations for traditional phone service do not apply to VoIP.

AT&T contends that interconnection regulation is “needless and harmful.” AT&T believes that the FCC has no authority to regulate interconnection.

How Will Interconnection Impact the Future of VoIP?

The FCC’s role in the future of VoIP is very important. If they decide to implement these interconnection regulations, then providers will have easy access to the ILEC’s networks. Easier access also means cheap access, which will help keep the VoIP provider’s overall costs low. And in turn, lower costs will help keep monthly rates low for subscribers.

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