Arbitrage and fraud have increasingly undermined the intercarrier compensation system for toll free or 8YY calls. This arbitrage can take a variety of forms, including traffic pumping schemes generating large numbers of illegitimate calls to toll-free numbers, so-called benchmarking abuses where competitive local exchange carriers aggregate other carriers’ 8YY traffic to hand it off to 8YY providers in areas where they can charge higher rates, and routing schemes where multiple toll-free database query charges are assessed by different carriers when only one query is needed. All these schemes result in higher costs for 8YY providers and customers alike, ultimately burdening consumers.
The Commission opened WC Docket No. 18-156 in June 2018 to address 8YY access arbitrage and released a Further Notice of Proposed Rulemaking, proposing a number of reforms of 8YY intercarrier compensation. In October 2020, the Commission released a Report and Order in which it adopted rules to address 8YY arbitrage and fraud. The new regulatory requirements reduce or eliminate, over time, most 8YY originating access charges that provide the underlying incentive for 8YY arbitrage schemes, consistent with the Commission’s commitment to move all intercarrier compensation to bill-and-keep. The Order required price cap and rate-of-return local exchange carriers (LECs or carriers) to transition their 8YY originating end office rates to bill-and-keep over a three-year period that ended in 2023. The order required carriers to eliminate their 8YY originating transport charges and instead charge a single nationwide joint tandem switched transport access service rate of no more than $0.001 per minute. Carriers were also required to lower their 8YY database query charges over three years to a cap of $0.0002 per query and are prohibited from charging for more than one query per 8YY call. Competitive LECs’ 8YY originating access charges must not exceed the rates charged by the competing incumbent LEC.
Principal 8YY Arbitrage Commission Actions