Phantom Traffic

Simply put, Phantom Traffic is all traffic terminating on your network where the call signaling does not include sufficient billing information in order for your company to bill and receive compensation from the responsible party. Non-billed traffic is terminating traffic with sufficient billing information that is not being billed.

In other words, you are leaving money on the table by not aggressively billing.

Being an industry-wide issue, all LECs are experiencing Phantom Traffic to some degree. As reported to Congress, between 20% and 30% of all terminating intercarrier traffic cannot be billed because it lacks sufficient billing information.

Phantom Traffic does not include terminating traffic that is not billed due to the lack of wireless or CLEC traffic termination agreements. Under this scenario, the responsible party is known, but there are no compensation agreements in place.

If your company is terminating this traffic, you should be aggressively pursuing termination agreements in order to receive compensation for the use of your network.

The major cause of Phantom Traffic is the current intercarrier compensation system, where termination charges vary significantly based on the jurisdictional classification of terminating calls. This variance creates an incentive for originating carriers to mask traffic to avoid the payment of termination charges, particularly if access compensation is due.

Another cause is the lack of definitive rules regarding the application of termination charges to VoIP traffic. Many VoIP providers are claiming that their traffic is an “enhanced service” and, therefore, exempt from the payment of access charges.

As part of the Missoula Plan filed by major players within the industry, including the consortium of rural carriers known as the Rural Alliance, the Phantom Traffic issue was brought to the forefront. In fact, Missoula Plan supporters requested the FCC take action in the form of Interim Approval of a Phantom Traffic solution.

As we all know, the FCC has not taken action, therefore, on April 24th, NECA petitioned the FCC to extend its call signaling rules to all interconnected voice service providers, to require that accurate calling party number (CPN) information be transmitted through the entire call path for all voice calls that terminate on the PSTN, and to permit the use of originating and terminating telephone numbers to determine the call jurisdiction when actual geographic data is unavailable. In addition, Congress has been asked to help and has filed a bill to persuade the FCC to take action.

On May 22, 2008, NECA sent a letter to all member companies stating that the key to solving the Phantom Traffic problem is “data showing the scope and magnitude of losses resulting from unbillable traffic”. NECA asked member companies to provide data that quantifies their Phantom Traffic problem.

If your company has empirical data quantifying Phantom Traffic that can be used by industry representatives, we encourage you to respond to NECA’s request.

We also encourage you to review your records to ensure you have agreements in place that will allow you to bill all interconnected carriers, particularly wireless carriers that are sending ever increasing amounts of traffic to your network. Additionally, we recommend that you audit current billing systems to ensure all carriers are being billed appropriately for terminating traffic.