irtual NXX, some CLECs had another way to service ISPs more economically. They developed switchless networks, in The Great Telecom Meltdown which their remote access servers themselves acted as both the switch and the modem. This was pioneered by a Massachusetts start-up, XCOM Technologies, which by 1998 had built a Signaling System 7 gateway between its Ascend TNT servers and the Bell Atlantic network. XCOM had started out using a costly Northern Telecom DMS-500 switch but was able to phase it out [6]. Level 3 bought the still-young company in 1998 for $154 million, an amazing payday for a tiny start-up, but Level 3 did expand the switchless service across the United States and Europe. It did not, however, have to depend on a home- grown gateway. Ascend, which was acquired that year by Lucent, developed its own Ascend Signaling Gateway; Nortel also introduced a gateway for its CVX-1800 RAS. Reciprocal Compensation Led to Large Initial Profits The relationship between CLECs and ILECs was very different from the rela- tionship between IXCs and LECs. An IXC was a customer of the LEC, purchas- ing access services, usually at highly inflated rates, at both ends of the call. A CLEC was, however, a peer, a co-carrier sharing in the delivery of one network's call made to the other's subscriber. There was ample precedent for this in areas where more than one LEC divided the turf. Los Angeles, for instance, was pri- marily Pacific Bell's franchise area, but it was also home to a patchwork of GTE franchise areas. Those two carriers were tightly interconnected and happily handed off calls to each other. On hundreds if not thousands of routes across the country, Bell and independent LECs, or two independents, handed off local calls to each other. In the vast majority of cases, the arrangement was bill and keep, in which neither side paid the other to terminate its calls. (This was a far simpler arrangement than applied to the shared intraLATA termination of toll calls, for which an elaborate procedure called meet-point billi