If you need more proof that Federal Communications Commission (FCC) telecom regulations and rate structures are out-of-touch with the digital communications era, you only need to go to Riceville, Iowa.
As reported in The Wall Street Journal, the FCC-managed access charge scheme allowed a couple of “enterprising entrepreneurs” to exploit the regulations and rack up huge profits when they created a conference calling system that purposely routed a massive amount of conference traffic through a rural carrier solely to tap into the higher access charges mandated by the FCC for smaller rural carriers.
This meant that the rural carrier was able to charge network providers like AT&T, Verizon and Qwest the higher rural rates, much higher than this traffic would have garnered had it moved undistorted through the nation’s telecom infrastructure.
When wire line telecommunications was the only game in town, the concept of access charges—the fees that the old Bell companies pay to smaller companies to facilitate service in hard to serve remote areas—might have arguably made sense. In those days it likely was the only way for the small independent companies to gain connectivity. But over time, rapidly changing technologies have made the whole access charge scheme antiquated at best and a get rich quick scheme at worst—gold plating smaller services at the expense of urban customers.
Such was the case in Riceville, Iowa.
And the underlying problem? The FCC rules regarding access charges are still based on a late 20th century wire line network configuration, a system no longer the dominant provider of telecommunications services. As of December 2004, there were more wireless subscribers than wire-line subscribers. But the access charge subsidy for wire-line access just keeps rolling along.
Today the emphasis is on Internet related services for voice, data and video services and the whole nature of the communications system is increasingly based on broadband. Maintaining existing access charge regulations only serves to facilitate mischievous activities and regulatory arbitrage at the expense of the telecom using public.
Rather than spend their time on proposed rules that would seek out providers engaging in unreasonable practices, the FCC should be addressing the real issue of phasing out access charges altogether.
Or we can make scammers in rural towns like Riceville, Iowa the telecom profit centers of the country.