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The Regulation

The Federal Communications Commission (FCC) regulates the prices phone companies charge each other when they hand off traffic to each other.  Long-distance companies pay “access charges” to local companies when they receive or terminate calls on the local networks. Other phone companies pay “reciprocal compensation” to the company of the customer who receives the call. The commission may soon undertake comprehensive reform of intercarrier compensation, either in response to a November 5 court deadline on a reciprocal compensation dispute, or as part of the recently-announced Biennial Review of telecommunications regulations.

Our Findings

• Access charges and some forms of reciprocal compensation subsidize rural and high-cost telephone companies at the expense of all other telephone custome