Crystal-Clear Compensation

The wireless industry might get some much-needed clarification on reciprocal compensation before the end of the year, thanks to a petition by Sprint PCS asking the FCC to delineate what network costs wireless providers can recover through reciprocal compensation.

The petition outlines what Sprint PCS believes to be wireless providers' rights, granted by the Telecom Act, to recover the cost of terminating traffic. Jonathan Chambers, Sprint PCS vice president for regulatory affairs, noted that the FCC has specified what costs wireline providers can recover but has yet to do the same for wireless.

"We asked the FCC to take the kind of analysis they used when describing LEC networks and do the same for wireless networks," Chambers said.

Differences between wireline and wireless networks frequently result in disputes over specific reciprocal-compensation charges. In arbitration, state commissions operate without compensation standards for wireless providers. Such cases often drag on for extended periods of time.

"The states have professed how difficult it is to look at a wireless network," Chambers said. "They don't have a lot of experience and the necessary expertise."

BellSouth and SBC, however, want the decision-making power left with the state commissions.

"They think they can avoid national rules and have better luck state-by-state where the Bell companies have a much larger presence and a longer history," Chambers said.

Although Sprint PCS isn't asking for specific charges to be included in compensation, it does believe that it's getting the short end of the deal.

"We're trying to show that (our) costs are higher and therefore we're entitled to a higher rate than the local telephone companies," Chambers said.

With a decision in Sprint PCS' favor, reciprocal compensation rates would rise from the current rates, between 0.5 cent and 1 cent, to "several cents," Chambers said. Sprint PCS also is content with forward-looking charges, rather than imbedded rates. Although the request has brought heated opposition from LECs and even AT&T Wireless, Sprint PCS remains confident.

"The law is clearly in line with what we're trying to do," Chambers said.

Should Sprint PCS prevail, Chambers believes that it will benefit on many levels. Rates would go down because "we'd have the ability to recover less money from our customers." That ability also would help the wireless industry compete with wireline. Despite the benefits, Chambers doesn't expect an easy victory; he knows that the LECs, facing additional costs, won't go down without a fight.

"It doesn't matter whether the law is on your side. It is in the interest of those who would have to pay what they are legally required to pay to fight this out and delay it until they would actually have to come up with the dough."