OSP Working Paper 33 (Dec 2000) proposes new ways of analyzing inter-carrier compensation given the significant problems facing existing interconnection regimes as competition and new technologies are introduced. DeGraba proposes a unified approach to interconnection pricing called Central Office Bill and Keep (“COBAK”). It would apply to all types of carriers that interconnect with, and to all types of traffic that pass over, the local circuit-switched network. COBAK is a default interconnection regime, which means it would apply only when two networks cannot agree on terms for interconnection.
DeGraba's COBAK proposal consists of two rules for local calls involving two networks. First, a called party’s carrier cannot charge an interconnecting carrier to terminate a call. Thus, each carrier recovers the cost of the loop and local switch from its own end-user customers. Second, the calling party’s network is responsible for the cost of transporting a call between the calling party’s central office and the called party’s central office. DeGraba concludes that COBAK will solve or ameliorate many of the significant problems that plague the existing interconnection regimes.