ICC Reform Beginning to Show Service Impacts

    In October of last year the FCC adopted an order aimed at reforming the voice-focused Universal Service program to one focused on bringing broadband to areas where it is not currently available and ensuring ongoing support for broadband. Plans to phase down inter-carrier compensation (ICC) and to require VoIP providers to pay ICC were also encompassed in the reforms.  Now that a few months have passed, I’d like to spend some time outlining the effect that this has had on M5’s service.


    Prior to the ICC reform, telecoms passing certified VoIP traffic to LECs (local exchange carriers), cable companies, and others behind local tandem infrastructure were not required to pay fees for access to terminate calls on these networks.  This enabled a huge marketplace for “VoIP only” players who set up capacity and infrastructure into LEC’s strategic markets and then undercut what a normal non-VoIP carrier would charge to terminate. This lever influenced the market to the advantage of the VoIP only termination providers.

    Following ICC reform, all carriers regardless of their traffic certification status (VoIP or non-VoIP,) have to pay access fees to traverse local LEC and cable networks.  This has caused some termination providers who built entire business models on $0 cost local access to either close their doors or be shut down by local network operators who collect access fees. The effect has been subtle but has had an impact on M5’s service.

    Impact on M5

    M5 purchases termination from Tier 1 providers and doesn’t directly traverse VoIP only carriers who were taking advantage of these rules before the reform. However, we discovered in January and February 2012 that some of our traffic does end up on these networks as a matter of normal business on the PSTN (public switched telephone network). That’s not a good thing if you’re interested in high quality voice like we are at M5.

    My first experience with this was in January with inbound PSTN traffic routing to M5 clients.  M5 has no choice over which carrier gets chosen when calls route from the PSTN to our customers’ phone numbers, so this call path is mostly out of our control. Early this year, we began seeing spotty call quality, mishandled call streams (sometimes triplicate), and other forms of degraded service in specific markets at a time. We immediately began troubleshooting these issues with our Competitive Local Exchange Carrier (CLEC) providers since they actually route the inbound traffic to us over private connectivity.  With the help of many interested partners and isolated testing, we discovered that a single VoIP only terminator was responsible for the problematic calls. This vendor was in the process of shutting their doors due to ICC reform and had limited staff operating their network.  This network,  which process billions of minutes monthly, caused us (as well as other service providers), much heartburn until they were resolved. Only with increased pressure was the vendor finally forced to replace their faulty gear.  When they did the problems were eradicated.

    The next time M5 saw the effects of ICC reform was directly with of our Tier 1 domestic termination partners. In March we saw normally great quality from our top provider plummet with 5% of calls presenting heavy Post Dial Delay (PDD). We immediately removed this carrier from routing to preserve quality, and later found out that their top LCR (Least Cost Routing) vendor was removed after they shut their doors following ICC reform.

    Light at the end of the tunnel

    One of M5’s providers, Certain Communications, is demonstrating a more forward approach to the ICC reform issue. Rather following the traditional strategy, which is to source minutes from wholesale clients and then LCR them to other vendors to finally terminate your traffic, Certain Communications is opting to build their infrastructure directly to local market end offices. This will ensure the minutes that terminate to Certain Communications stay on a single network all the way to the local market.  They are pursuing this market using technology that can bridge VoIP to old-school PSTN/TDM networks. What’s more interesting is that Certain is selecting the areas to start building their network based on customer need in areas where quality is known to be tough: New Hampshire, Upstate New York, Central Pennsylvania, and the like.

    Since these events transpired, I’m confident that more shakeout is yet to take place as the year unfolds and market competition changes. Today, I believe that only through vigilance and understanding the market can we as service providers police the service levels on the PSTN. More transparency mechanisms are needed between PSTN networks are where providers can update each other with reachability statistics, quality metrics, and other service levels. At M5, we’ve developed such a standard for our hosted IP PBX application called TRUST (http://trust.shoretelsky.com). Here, anyone with an internet connection has real time access to uptime and quality metrics surrounding our service. Our hope is to encourage other interconnected providers to start publishing similar metrics for an overall more harmonious approach to higher service levels.

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