ICF proposal a big step for telecom

It took longer than expected to formulate, but the Intercarrier Compensation Forum (ICF) plan to overhaul the badly broken intercarrier-compensation system at first glance appears to resolve arguably the biggest issue in the industry.

Kudos to all participants who spent the last 14 months helping formulate the proposal, which provides a detailed roadmap to a much-needed uniform intercarrier-compensation regime that promises to make many arbitration cases and most regulatory-arbitrage tactics moot. As previously mentioned in this space, establishing a uniform access system for all traffic would resolve the biggest issues in a significant number of the dockets pending before the FCC--most notably, the proceedings addressing voice-over-IP policies.

Other intercarrier-compensation proposals exist, but expect the ICF plan to emerge as the foundation for debate on the issue for several reasons.

Although the ICF ended up with just nine of the 20-plus participants endorsing the proposal, it still easily represents the broadest consensus, with an RBOC, a couple of rural carriers, several long-haul providers and a couple of participants representing the interests of two of the largest U.S. wireless carriers. All have an eye on VoIP, with AT&T having a particular incentive to ensure that cable operators will be able to provide a platform to offer the technology to residential consumers.

By most accounts, the ICF plan is a compromise, largely because no industry segment seems thrilled with it or thoroughly disgusted by it. Yes, it would provide some breaks to the dying standalone long-distance sector and would eliminate some protections the now-mature wireless market currently enjoys, but it's still better than the status quo and probably can be tweaked to address many concerns.

Perhaps the biggest question revolves around facilities-based CLECs. Federal policymakers have long said they want facilities-based competition, but would the elimination of access charges proposed in the ICF plan discourage CLECs from making capital investments in their infrastructure?

On the other end of the spectrum, arguably the biggest break would go to rural incumbents, which would receive a new revenue stream via a creative usage-based charge. Whether the proposal provides too much or too little to rural carriers is unclear, but I'm fairly certain this proposal would have had no chance politically without this concession.

Perhaps most importantly, the ICF plan appears to be extremely detailed and comprehensive. The proposed transition to a largely bill-and-keep system by 2011 is outlined in a step-by-step process, and the ICF says its "detailed" version of the proposal likely won't be released for a couple more weeks. It won't make any best-seller lists, but don't be surprised if large chunks are inserted directly into the new rules.

From an industry perspective, the ICF proposal provides a reasonable structure to resolve a very troublesome issue in the telecom arena and deserves to be the launching point in the debate to revamp the beleaguered intercarrier-compensation regime.

But the ICF proposal's conceptual promise is threatened by the harsh realities of the law and politics. Consumer groups already are up in arms over the proposed increases to the subscriber line charges, and the FCC's legal authority to pre-empt state commission's intrastate access systems seems questionable, at best. We'll examine those issues next week.

E-mail me at djackson@primediabusiness.com.