Wireless Compensation: The Order clarifies certain aspects of intercarrier compensation for traffic exchanged between Commercial Mobile Radio Service providers (wireless carriers) and LECs. Most significantly, the Order adopts bill-and-keep as the default compensation for intraMTA traffic exchanged between LECs and wireless carriers, as of the effective date of the Order. The FCC did not adopt any “glide path” for moving to bill-and-keep for wireless interconnection. The Order also (i) clarifies that compensation obligations under 47 C.F.R. § 20.11 are coextensive with reciprocal compensation under 47 U.S.C. § 251(b)(5); (ii) adopts an interim default rule limiting rate-of-return LEC’s responsibility for transport costs for non-access wireless traffic; and (iii) reaffirms that neither interstate nor intrastate access charges apply to intraMTA traffic. While these changes will affect many existing LEC-wireless compensation arrangements over time, the FCC did not abrogate existing commercial arrangements or permit a “fresh look” with respect to existing contracts.

Background: Two separate regimes govern intercarrier compensation for non-access traffic exchanged between wireless carriers and LECs: Section 20.11 of the FCC’s rules was adopted in 1994 and requires that wireless carriers and LECs comply with “principles of mutual compensation” and that each pay “reasonable compensation.” Section 251(b)(5) was adopted as part of the 1996 Act and requires “reciprocal compensation.” The FCC noted that the existence of these two overlapping regimes has led to disputes between wireless carriers and LECs, including the scope of wireless carriers’ obligation to pay reciprocal compensation under Rule 20.11, in the absence of a compensation agreement.