phone fun, was GeoIP database issues and the real world consequences

John Levine johnl at
Wed Apr 20 15:20:23 UTC 2016

>> For the most part, “long distance” calls within the US are a thing of the
>> past and at least one mobile carrier now treats US/CA/MX as a single
>> local calling area 
>Is this a case of telcos having switched to IP trunks and can reach
>other carriers for "free"

No, it's because fiber bandwidth is so cheap.  It's equally cheap whether
the framing is ATM or IP.

>Or are wholesale long distance still billed between carriers but at
>prices so low that they can afford to offer "free" long distance at
>retail level ?

Some of each.  Some carriers do reciprocal compensation at very low
rates, small fractions of a cent per minute, some do bill and keep
with no settlements at all.

The history of settlements is closely tied to the history of the
Internet.  Before the Bell breakup separations (within Bell) and
settlements (between Bell and independents) were uncontentious, moving
money around to make the rate of return on invested capital at each
carrier come out right.

Then when cell phones were new, the Bell companies observed that
traffic was highly imbalanced, far more cell->landline than the other
way, so they demanded high reciprocal compensation, and the cellcos
were willing to pay since it gave the Bells the incentive to build the
interconnecting trunks.  One of Verizon's predecessors famously
derided "bilk and keep."

Then the dialup Internet became a big thing, the Bells ignored it as a
passing fad (which it was, but not for the reasons they thought), and
CLECs realized they could build modem banks and make a lot of money
from the incoming calls from Bell customers to the modems.  So the
Bells did a pirouette and suddenly discovered that bill and keep was a
law of nature and recip comp was a quaint artifact that needed to be
snuffed out as fast as possible.

These days the FCC likes to see cost justifications for settlements,
and the actual per-minute cost of calls is tiny compared to the fixed
costs of the links and equipment.  The main place where you see
settlements is to tiny local telcos with very high costs, with the per
minute payments a deliberate subsidy to them.  Then some greedy little
telcos added conference call lines to pump up their incoming traffic ...


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