Analyst: Bill-and-keep proposal calls for four-year transition period

A much-anticipated industry proposal to eliminate access charges and move to a bill-and-keep accounting system calls for a four-year transition period that would begin in July 2005, according to telecom analyst Andy Regitsky, president of Regitsky & Associates.

If adopted, the Intercarrier Compensation Forum proposal would eliminate charges for interstate access, intrastate access and reciprocal compensation by 2009, Regitsky said. However, it’s doubtful such a plan could be implemented as soon as 2005, he said.

"Don’t worry that you’re going to lose your job if you work in the access area, because I don’t see it happening for a couple of years, at least," Regitsky said.

Specifically, Regitsky noted that rural ILECs and state commissions would resist a bill-and-keep regime. Rural carriers depend heavily on access charges and would require significant changes to the universal-service funding program to remain revenue neutral—a task that would be "virtually impossible" for the FCC to accomplish when the subsidy fund is strained financially, Regitsky said.

In addition, Regitsky said there will have to be a major "selling job" done with state commissions, which have seen their authority diminished in the areas of reciprocal compensation, unbundled network elements and likely voice over IP, assuming the FCC maintains the calling technology is interstate in nature. Removing intrastate access rates from states would continue this trend in an unpopular manner, he said. "In the area of telecommunications, [state commissions] might say, ‘What’s left?’"

There also will be significant network issues that have to be resolved, such as determining where calls are handed off and how to compensate a transporting carrier that neither originates nor terminates the call, Regitsky said.