Google Voice and Reciprocal Compensation on NPR [Telecom]

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***** Moderator's Note *****

This is a good introduction to the ways that the reciprocal compensation rules can be used to benefit certain classes of traffic. CLECs are incentivized to serve "receive only" lines, i.e., lines which seldom make outgoing calls, so as to tip the compensation rules in their favor. Since the terminating company gets paid by the IEC, CLECs with a lot of conference-call or "chat room" or other customers who answer lots of calls, but make very few, can turn a profit.

Google, which is in the awkward position of having almost all "originating" traffic, must pay the higher rates which some rural ILEC/CLECs are allowed to charge for terminating calls.

Bill Horne Moderator

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CLECs made a lot of money from recip comp on calls to modem banks, but that's not what's going on in this case.

This is "traffic pumping" in which midwestern rural LECs with very high termination rates host conference bridges and numbers that forward over VoIP to other countries. In the case of recip comp, the big telcos had only themselves to blame, because they demanded it from CLECs, but in this case it's the greedy little RLECs who are acting abusively. Their rates are set to provide a certain amount of subsidy based on their low historic traffic, which suddenly goes up by orders of magnitude. In one case I read that an RLEC that used to get something like $20K/yr from AT&T pumped up the traffic to $1M/month.

Adding to the fun, there are two CLECs in Iowa that set themselves up just to join in the pumping fun, by opting into the existing high termination rates in the areas they purport to serve. In a recent case the Iowa state regulators found that one of the CLECs had no real customers in their alleged service area at all and turned them off.

R's, John

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John Levine

Why doesn't Google Voice charge a toll to those changes?

Even if it determined that they are a phone company, there is no law that says that free service has to be given to all customers for all calls.


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That would imply Google voice implemented a rating/billing system. Given that a very significant proportion (50%?) of a conventional telco's operating costs are associated with call data capture, rating, billing and collection activities, it would destroy their business model to implement such a system for a limited set of numbers.

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