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Separate Statement of
Commissioner Susan Ness

Re: Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92 96-98.

In the five years since passage of the Telecommunications Act of 1996, we have taken significant steps to adapt to the changing marketplace the payments made from one carrier to another for the exchange of traffic. We have begun, although not yet completed, efforts to identify and make explicit the subsidies embedded in intercarrier payments. And we have modified rate structures so that payments more accurately reflect costs and the manner in which those costs are incurred. Our goal in all of these measures has been to reduce distortions in the marketplace that serve as impediments to competition.

Each of these incremental actions, however, addressed problems with a specific intercarrier compensation mechanism. Yet, we still have in place today a system under which the amounts, and even the direction, of payments vary depending on whether the carrier routes the traffic to a local carrier, a long-distance carrier, an Internet provider, or a CMRS or paging provider. In an era of convergence of markets and technologies, this patchwork of regimes no longer makes sense. What had been a historical artifact may have become an unsustainable anomaly.

Today’s proceeding gives us an opportunity to take a fresh look at these various regimes and consider actions to harmonize the different payment structures. We should not underestimate the complexity of this undertaking. Even were we writing on a clean slate, this proceeding would present a daunting challenge. We must now also take account of the historical structure and the business plans and expectations that have been created by those regimes. We must also resist merely applying legacy regimes to new services. Although it is not clear that a “one-size-fits-all” approach to intercarrier compensation is warranted, our goal must be a consistent and rational system that relies to the greatest extent possible on market forces – and not the possibility of arbitrage created by different payment structures – to drive technological advances and innovation. If we are successful in our efforts to eliminate barriers to competition, consumers will reap the benefits -- more choice, improved services, and lower prices.

At the same time, I urge the Commission to remain mindful of the implications of our actions on those living in rural and other high-cost areas. We must take heed to preserve the third pillar of the Telecommunications Act of 1996 – universal service. Consumers will only benefit when we establish an economically rational, competitively neutral, explicit mechanism that will promote the Act’s goals of competition, deregulation, and universal service.