Bill and Keep Explained

Bill and Keep is a billing model used in the telecommunications industry, where the network operator doesn't charge the end-user for the data that is sent to them, but only for the data sent from them.

In this model, the network operator is responsible for the transmission of data to the end-user, and the end-user is responsible for the transmission of data back to the network operator.

The Bill and Keep model is also known as a "free" or "zero-rated" model, as the end-user doesn't incur any costs for receiving data.

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Bill and keep is a pricing arrangement for telecommunications networks where the reciprocal call termination charge is zero, meaning each network agrees to terminate calls from the other network at no charge.

This approach is also known as net payment zero and represents an alternative to traditional wholesale cost recovery models.

In a bill and keep arrangement, networks recover their costs only from their own customers rather than from the sending network.

This has been proven to result in significantly higher levels of calling activity.

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The FCC has mandated a bill-and-keep approach for access charges on toll-free calls to curb "arbitrage and fraud" undermining the intercarrier compensation system.

Carriers will be paid by their subscribers rather than by other carriers to cover the cost of their networks, ensuring that the called party continues to pay the toll charges for toll-free calls.

A transitional step will combine transport and tandem switching charges for toll-free calls into a single access charge capped at $0.001 per minute, with charges for 8YY database queries transitioning to $0.002 over nearly three years.

The FCC aims to end the waste and arbitrage associated with the complex carrier-to-carrier billing system, which has encouraged robocallers to make massive numbers of illegitimate calls to toll-free numbers.

In the UK, the telecoms authority Ofcom regulates mobile termination rates at long-run incremental cost (LRIC), but this may distort retail pricing incentives in the mobile market, adversely affecting consumer welfare.

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The FCC has mandated a bill-and-keep approach for access charges on toll-free calls to curb arbitrage and fraud.

This change aims to end the complex carrier-to-carrier billing system that has encouraged robocallers to make illegitimate calls to toll-free numbers and driven up costs for consumers and businesses.

The FCC's goal is to ensure that the called party will continue to pay the toll charges for toll-free calls.

Access charges, which are per-minute charges paid by one carrier to another, tend to be higher in rural areas where network costs are the highest.

Arbitragers have taken advantage of this system by partnering with rural carriers to terminate toll-free calls and sharing intercarrier compensation revenue.

The FCC has taken various actions to curb traffic pumping, but arbitrage opportunities have continued to exist.

A bill-and-keep arrangement is one where carriers are paid by their subscribers rather than by other carriers to cover the cost of their networks.

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The FCC's order adopted a transitional step to combine transport and tandem switching charges for toll-free calls into a single access charge capped at $0.001 per minute.

Charges for 8YY database queries will transition to $0.002 over nearly three years.

FCC Chairman Ajit Pai notes that toll-free calls have provided an essential service to consumers and businesses, but the current system has encouraged arbitrage practices that drive up costs.

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Abstract AI

The UK telecoms authority Ofcom's regulation of mobile termination rates at long-run incremental cost (LRIC) may distort retail pricing incentives in the mobile market, affecting consumer welfare.

This regulation can lead to a complex competition involving positive networks externalities for the incumbent operator when retail prices differ between on-net and off-net calls.

Regulatory measures like asymmetric access charges are introduced to reduce the competitive disadvantage for new entrants and smaller operators.

Asymmetric access charges involve charging operators differently for terminating calls on their own network versus calls on a rival network.

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Termination charges affect retail prices, and receivers derive some utility from a call, which can influence pricing decisions.

Firms may charge consumers for receiving calls when the termination charge is below cost, and this can lead to a below-cost termination charge that maximizes total welfare.

In a market with strong call externality, firms prefer a below-cost termination charge and will use a retail price parity (RPP) regime.

In contrast, a weak call externality leads firms to prefer a termination charge above cost.

The regulation of mobile termination rates at LRIC can have implications for competitive markets, including the use of a 'bill-and-keep' approach to termination rates.

This approach can provide a contrasting view of competitive markets, where termination rates are not regulated at LRIC.

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