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November 05, 2009

CLEC Access Reform: Rural Exemption Enables Traffic Pumping

The phenomenon known as traffic pumping has, at its core, a requirement for high switched access rates. Given the benchmarking requirements set forth by the FCC in its CLEC Access Reform rulings (often referred to as the Seventh and Eight Reports and Orders) there is limited opportunity for competitive local exchange carriers to charge rates high enough to rationalize traffic pumping and the associated relationships with free calling service companies. The small minority of carriers that do characterize themselves as rural exempt.

So, what does this mean?

As part of the rulings, a CLEC is required to “mirror” the rates of the dominant incumbent local exchange carrier (ILEC) for interstate switched access. Most often, this is one of the regional bell operating companies (RBOCs). The FCC carved out a set of criteria by which a CLEC could exceed the ILEC rate. Specifically, if the CLEC competed with a non-rural ILEC and served only customers from areas with a population less than 50,000, then it was afforded the ability to charge the highest banded rate from NECA FCC No. 5. The next logical step in the progression here, then, is traffic pumping migrated to CLECs whose service area illustrated they served only rural geographic areas. Thus, these CLECs could theoretically gain the benefit of the higher switched access rates and the high volumes of traffic associated with traffic pumping.

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