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

Wed Apr 20 17:02:13 UTC 2016

Great explanation!

Remember that LECs (Local Exchange Carrier, CenturyLink, Verizon, etc.) 
typically get to decide how this all works...
ATT is still an 800 pound gorilla and a couple years ago stopped ALL 
payments to CLECs (Competitive Local Exchange Carrier, buy wholesale 
from LECs), took them all to court (which for a CLEC, it is almost 
impossible to find a good lawyer not on retainer to a LEC) and basically 
just told everyone what they would pay...

Since all the LECs started offering unlimited long distance, they could 
not afford the termination fees.
So... They changed them!!!

Telco is very different from data, not in the physical aspects, but in 
the business and political areas.

On 4/20/16 9:20 AM, John Levine wrote:
>>> 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 ...
>
> R's,
> John
>