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Will South Dakota stop traffic pumping?
February 27, 2011
There is an old adage that says nothing in life is free. You know those advertisements you see for free internation calls and pornographic chat lines? There’s actually a huge cost for those services. Unfortunately, millions of wireless subscribers like you help to pay for them through higher bills because of a practice known as access stimulation or “traffic pumping.”
Traffic pumping is the practice of artificially moving traffic onto a local exchange carrier (LEC). Traffic pumping takes place when an LEC enters into an arrangement with a calling company to carry “free services” over the LEC’s network. But because federal law requires that wireless and long-distance carriers reimburse LECs for calls on the network, the LECs take advantage of the increase in traffic and assess high fees on the wireless and long distance carriers. Consumers are ultimately the ones who must pay these fees through higher telephone bills. What’s more, the LEC pays the calling company a kickback for the increased traffic.
By one estimate, traffic pumping costs wireless consumers $190 million per year. The problem is now so serious that the Federal Communications Commission has called for efforts to address traffic pumping because it threatens to undermine the very basis of compensation for services in the telecommunications system. South Dakota appears to have heard the call for action, so much so that several senators have introduced Senate Bill 87. The bill would explicitly prohibit LECs from assessing charges certain “access stimulation” for traffic pumping. Unfortunately, the bill has become mired in a committee.
As we said in a letter to the Senate regarding SB 87, “regulations on both the telecommunications marketplace and the interaction among providers should be streamlined and kept to a sensible minimum. However, neither should those regulations create distortions that artificially impede upon the efficiency of the telecommunications sector nor impose higher prices on consumers.” SB 87 addresses these issues. Let’s hope that the Senate gets the message that this is not a narrow problem but a serious issue that needs action now.
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