Firm Advisory on the Denial of Direct Connects by Certain National Wireless Carriers and the Associated Arbitrage

Several wireline carriers have reported that they are experiencing a new form of arbitrage perpetrated by certain national wireless carriers. Specifically, these reports state that certain wireless carriers are engaging in arbitrage schemes that involve: (a) disconnecting existing direct connects for certain types of terminating traffic that would be subject to bill-and-keep (i.e., without charge) if delivered over such direct connects; and (b) requiring that such terminating traffic be routed indirectly via the wireless carriers’ “intermediate carrier partner(s)” that impose expensive per minute of use (“MOU”) fees. The reports further claim, on information and belief, that these intermediate carriers are then sharing, in some form, such compensation with their wireless carrier partner(s).

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