News

Small Telcos Seek VoIP Answer from FCC

2/17/2004 9:21 AM Eastern

Small and rural phone companies fear major financial repercussions if AT&T Corp. is allowed to cut access payments for the completion of calls that traverse the long-distance carrier's Internet backbone.

AT&T has reduced its payments to local phone companies, claiming that Internet voice traffic carried long distance merits a lower level of compensation to local carriers.

AT&T has asked the Federal Communications Commission to endorse its position, but the agency has not acted in some 15 months.

The reduction in access payments could cost small and rural phone companies hundreds of millions of dollars per year -- money that local carriers with high fixed costs use to keep their local-calling plans affordable.

In a letter to the FCC Feb. 13, United States Telecom Association president Walter McCormick said that if the agency embraced AT&T's view, small phone companies could lose more than $2 billion collectively in access fees.

McCormick urged the FCC to move swiftly in ruling that long-distance calls that originate and terminate on local phone networks are required to pay access fees, even if a portion of the calls ride AT&T's Internet backbone.

"If the FCC were to further delay or rule adversely to its current access rules, the consequences may be catastrophic for rural [phone companies]," McCormick wrote.

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