Analysis of the QSI Study
4 March 2005
By Dr. William Taylor and former NERA Vice President Dr. Timothy Tardiff
The Federal Communications Commission (FCC) is currently considering an important policy issue concerning whether ordinary long distance telephone calls and those that customers make through the Internet -- Voice over Internet Protocol (VoIP) calls -- should be charged the same rates when they use the networks of traditional local telephone companies to complete the call. Earlier this year a provider of wholesale services to retail VoIP providers filed a study with the FCC purporting to show that the revenue consequences of charging much lower rates for VoIP calls would be negligible for local telephone companies. At the request of the United States Telecom Association (USTA), NERA Special Consultant Dr. William Taylor and former Vice President Dr. Timothy Tardiff evaluated the accuracy of this study and its conclusion. Drs. Taylor and Tardiff found that correcting conceptual errors and dubious assumptions in the study results in potentially serious revenue consequences for local telephone companies that are approximately ten times larger than those reported in the study. The complete results of NERA's evaluation are contained in the study submitted to the FCC on 4 March 2005.
NERA's corrected version of the QSI model, which accompanies this study, can be downloaded here.
