Traffic Pumping

When you make a long distance call, that call is generally handled by a number of telephone companies – Your local carrier delivers the call from your phone to a long distance company, the long distance company carries the call most of the way to its destination, and then the call is handed off to the local carrier that serves the party you’re calling. Under today’s rules, the long distance company pays a fee, called an “access charge,” to the local carrier that delivers the call to the called party.

Access stimulation, also referred to as “traffic pumping,” occurs when a local carrier with high access charge rates enters into an arrangement with another company with high call volume operations, such as chat lines, adult entertainment calls, or “free” conference calls. The arrangement inflates or stimulates the number of calls into the local carrier’s service area, and the local carrier then shares a portion of its increased access revenues with the “free” service provider, or provides some other benefit to that company. The local company’s profits from such an arrangement are typically so great that its charges become unreasonable and unlawful under FCC regulations.

Access stimulation is harmful to consumers and competition in a number of ways. First, it distorts investment incentives. As a result of an access stimulation scheme, the long distance companies are forced to recover the inflated access costs from all of their customers, even though many of them do not use the services that caused the stimulation in demand. It also harms competition by giving companies that offer, for instance, free conference calling services a competitive advantage against companies that charge their customers for the service.

Allegations of access stimulation have led to a number of disputes between local and long distance telephone companies, a number of have been resolved by the Commission through a formal complaint process.

In addition, the Commission recently adopted rules designed to reduce the ability to engage in access stimulation.

The Enforcement Bureau will enforce these new rules by continuing to resolve disputes between individual companies, either through mediation or by resolving formal complaints.

Applicable Rules

Recent Actions

Qwest Communications Corporation v. Farmers and Merchants Mutual Telephone Company, Memorandum Opinion and Order, FCC 07-175

● finding that Farmers earned an excessive rate of return in violation of Section 201(b) of the Act.

Qwest Communications Corporation v. Farmers and Merchants Mutual Telephone Company, Order on Reconsideration, FCC 08-29

● granting Qwest’s Petition for Partial Reconsideration and initiating additional proceedings to consider the relevance of new evidence.

Qwest Communications Corporation v. Farmers and Merchants Mutual Telephone Company, Second Order on Reconsideration, FCC 09-103

● finding that Farmers was not entitled to charge Qwest tariffed switched access rates because Farmers’ conference calling company customers were not end users under its interstate access tariff.

All American Telephone Co., e-Pinnacle Communications, Inc., and ChaseCom v. AT&T Corp., Memorandum Opinion and Order, FCC 11-5

● finding that neither AT&T’s failure to pay the CLECs’ charges nor its failure to file a “rate complaint” with the Commission violated any provision of the Act.

AT&T Corp. v. YMax Communications, Corp., Memorandum Opinion and Order, FCC No. 11-59

● finding that YMax violated sections 203(c) and 201(b) of the Act by assessing interstate switched access charges that are not authorized by YMax’s federal tariff.

Qwest Communications Corporation v. Farmers and Merchants Mutual Telephone Company, Third Order on Reconsideration, FCC 11-87

● denying Farmers’ petition for reconsideration of the decision that Farmers was not entitled to charge for tariffed switched access.

Qwest Communications Corporation v. Northern Valley Communications, LLC, Memorandum Opinion and Order, FCC 11-87

● finding that Northern Valley’s tariff violated Section 61.26 of the Commission’s rules and was therefore unlawful in violation of Section 201(b) of the Act.

Sprint Communications Company, L.P. v. Northern Valley Communications, LLC, Memorandum Opinion and Order, FCC 11-111

● finding that Northern Valley’s tariff violated Commission rules 61.26 and 61.2(a) and contained a number of unreasonable payment and billing provisions.

Qwest Communications Corporation v. Northern Valley Communications, LLC, Order on Reconsideration, FCC 11-148

● dismissing Northern Valley’s Petition for Reconsideration on procedural grounds and alternatively denying it on the merits.

Sprint Communications Company, L.P. v. Northern Valley Communications, LLC, Order on Reconsideration, FCC 11-170

● dismissing Northern Valley’s Petition for Reconsideration on procedural grounds and alternatively denying it on the merits.

Bureau/Office:

Consumer and Governmental Affairs

Enforcement

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