For over 50 years, toll free numbers have been exceptionally successful.  Toll free numbers enable businesses and institutions to support branding initiatives, facilitate marketing campaigns, promote a national presence, and to simply make it convenient for people to reach them without regard for cost.

Unfortunately, arbitrage and fraud schemes such as toll free traffic pumping, are increasingly undermining the integrity of the intercarrier compensation model for toll free calls.  To address this issue, the Federal Communications Commission, took definitive steps to reduce intercarrier compensation charges that provide the underlying incentive for toll free routing arbitrage and fraud schemes.

Specifically, the FCC ruled the following:

• Cap all originating 8YY end office, tandem switching and transport, and database query charges at their current rates as of October 9, 2020
• Reduce originating 8YY end office access charges by moving to a bill-and keep model over three years beginning July 1, 2021 and ending July 1, 2023
• Adopt the combination of 8YY originating transport and originating tandem switching access charges into a single nationwide tandem switched transport access charge capped at $0.001 per minute
• Reduce 8YY database query charges, needed to route all 8YY calls, to a cap of $0.0002 per query in three steps ending July 1, 2023
• Prohibit carriers from double dipping by charging for more than one such database query per call.

On the upside, the incentives for arbitrage that unnecessarily raised costs are now reduced.  Similarly the incentive that encouraged bad actors to generate high-volume robocalls for toll free traffic pumping is greatly reduced. And maybe most importantly, these are critical steps to protect 8YY customers who have been unnecessarily burdened by high costs and fraudulent 8YY calls that they had to pay for.

On the downside, for carriers, the impact of this ruling is a significant shift of the burden to support 8YY calls.  The old pricing model created an incentive for originating operators to leave TDM transport, tandem switching, and even extra route miles in the call path.  The new model reflects the modern reality of tandem-less networks and efficient IP transport.  All carriers involved in handling 8YY calls are now caught in squeeze of having to cover their own costs under the bill-and-keep model as well as having limits on how much they can recoup for handling 8YY calls.  Carriers need new methods to restore profitability.

The two most significant ways to reduce costs, thus preserving margins on handling toll free calls, is for the originating carrier to:

• Have the most cost-effective way to identify the responsible organization (RespOrg) for the termination of each toll free call.
• Where possible, to utilize directly routing to RespOrg for the toll free call termination to maximize inter-carrier compensation

Ribbon’s Toll-Free Routing service delivers these capabilities.