Dear Senator:
Onbehalf of the National Taxpayers Union’s (NTU’s) 1,300 members in South Dakota,I urge you to support Senate Bill 87 (SB 87), which would prohibit localexchange carriers (LECs) from assessing certain “access stimulation” charges. NTU has a longstanding history of opposition to unfairand disproportionately high tax rates on telecommunications services, as wellas opposition to government subsidies for entities such as Rural ElectricCooperatives. We are concerned that much like those policies, currentregulations regarding LECs may be burdening consumers with unnecessarily highercosts.
Accessstimulation (also known as traffic pumping) is the practice of artificiallymoving traffic onto a local exchange carrier. Traffic pumping takes place whenan LEC enters into an arrangement with a calling company to carry “freeservices” over the LEC’s network. These include conference calls, pornographicchats, and international calling. But because federal law requires thatwireless 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 thewireless and long distance carriers. Consumers are ultimately the ones who mustpay these fees through higher telephone bills. What’s more, the LEC pays thecalling company a kickback for the increased traffic.
Byone estimate, traffic pumping for free services now cost $190 million a year incharges that are ultimately passed onto wireless consumers in South Dakota andelsewhere. To date, the Federal Communications Commission (FCC) has receivedscores of complaints regarding traffic pumping. In the National Broadband Plan,the FCC has recommended the curtailment of traffic pumping in order to maintainthe integrity of intercarrier compensation, an underpinning of the nation’stelecommunications system. Additionally, the American Legislative ExchangeCouncil, the nation’s premier organization of conservative lawmakers, recentlyadopted a resolution that encouraged the FCC and state legislatures to resolvetraffic pumping issues by, in part, ensuring that statutes at least do notpromote traffic pumping.
Regulationson both the telecommunications marketplace and the interaction among providersshould be streamlined and kept to a sensible minimum. However, neither shouldthose regulations create distortions that artificially impede upon theefficiency of the telecommunications sector nor impose higher prices onconsumers. SB 87 strikes a sensible balance between these principles. Therefore, our members hope you will support thislegislation.
Sincerely,
John Stephenson
StateGovernment Affairs Manager