The Bell System divestiture in 1984 did more than spur a competitive communications environment. It required the integration of several networks in cooperative competition to maintain the viability of the existing communications infrastructure. This cooperation required the separate networks to come to agreement on the use of each other’s network and the method on compensation for said network’s use.

The single largest requirement that resulted directly from Divestiture was the Interconnection Agreements standardized by industry-wide bodies for cooperation and compensation between Interconnect Carriers. Methods and procedures for these agreements were based largely on tariffs filed with the Federal Communications Commission (FCC) and the rules set down as a result of the Order of Divestiture.

An outgrowth of Divestiture and the eventual rules surrounding open competition in the telecommunications industry was the appearance of the Competitive Local Exchange Carriers (CLECs). The industry saw tremendous growth of these companies in the 1990s all vying for a piece of the telephone pie at the Local rather than the Long Distance level. Most of these CLECs failed or were taken over by the larger companies by the end of the decade as the telephone industry declined. CLECs figured to do at the local level what the Long Distance Carriers did for long distance, spur competition and lower the cost of telephone calls. They were in direct competition with the existing Local Exchange Carriers (LEC) on whom they were dependent for access to the nation-wide networks. To achieve this to completion, local Public Utility Commissions wrote rules and required tariffs that would level the playing field for the CLECs. This resulted in the second largest requirement that resulted indirectly from Divestiture, the Reciprocal Compensation Agreement.

The rules of compensation for network use resulted from these two distinctly different but similar agreements. The Interconnect Agreement, covering long distance interconnection, allows local companies to be compensated for the use of their network by the Long Distance networks. The Reciprocal Compensation Agreement, covering local connections, allows two Local Exchange carriers to be compensated for the use of each other's network. Both agreements allow for Originating and Terminating compensation, and both agreements layout rules for billing, payment and dispute resolution. The originating portion of these agreements pose little issue as each tandem network connected to the originating network can easily identify the source of the traffic and bills or disputes accordingly. It’s the terminating network that has difficulties and loss when they attempt to invoice traffic that does not carry the identity of the originating network in the delivery packets. When the terminating network recognizes the traffic but does not know the identity of the network of origin it cannot bill the traffic. This is called Phantom Traffic.

Phantom Traffic affects mostly the Independent Operating Companies (IOC) and rural telcos. It can account for the loss of 10% – 30% of terminating revenues, and is a major concern of the industry. The FCC in Docket 01-92 has asked the industry for comment before proceeding to a ruling on how to handle the problem. At present, most companies are moving towards supporting a recommendation set forth by the United States Telecom Association (US TELECOM) requesting FCC action on Phantom Traffic. In the recommendation, US TELECOM is asking the commission to apply several rules, such as requiring all networks to insure that the originating information about a call in contained in and passed to the point of termination.

Some companies state that they feel their connecting partners have deliberately stripped or changed the call detail to avoid costly termination fees. In 2004, MCI was accused of bringing about the loss of millions of dollars in access charges by altering or eliminating details in the traffic. MCI was further accused of re-routing long distance traffic over less costly local-use only trunks. An internal investigation revealed no criminal actions, and an investigation by the FCC has not yielded any results.

How can a company protect itself from this? The best method is to generate Call Detail Records (CDRs) for every call that originates from or terminates to their network. If this is too much of a burden on the systems that collect and disseminate call data, SS7 probes and collection of SS7 data for calls is another preferred method to capture the traffic data.

Once captured a provider must separate out the recognizable data from data that cannot be billed. This can be accomplished by analyzing the data for the Calling Party Number in the Terminating CDR or in the Initial Address Message IAM packet in the SS7 record. Other information contained in the IAM includes the Charge Number and the Jurisdictional Information Parameter (JIP). The JIP is meant to contain the CIC of the originating network, but has been found ineffective because many smaller telcos and wireless providers do not have these codes. If any of this information is missing, the call cannot be billed back to the originating company. A piece of information that can be critical in identifying this usage is the Trunk Group Number (TGN). Although it does not by itself contain information about the origination point, it will define the last point in the network handling the call, and this operator could be a strong ally in finding and identifying the traffic. It is important to capture and identify the traffic. It allows a company to realize the size of the problem and detect whether the error is inadvertent or deliberate fraud. Both result in revenue leakage and inflated expense.

Once a company has captured and categorized the traffic, it must work with its network partners, standards and regulatory bodies to seek remedy. Much of the Phantom Traffic today is from wireless carriers and the problem will increase as new technologies (VoIP) come on-line and more traffic is pushed on and off the PSTN at hop-off points totally unrelated to the point of origination.

Failure to identify Phantom traffic could put a company in jeopardy of failing a Sarbanes-Oxley audit. TeleSciences can help identify and categorize this traffic.