s exploring broader use of pricing regimes that are not usage-sensitive. For example, the FCC had tenta- tively concluded in 1996 that wireless providers should interconnect with wireline providers on a bill-and-keep basis. In drawing this conclusion, it noted studies indicating that the transaction costs of metering the termination of traffic were suf- ficiently high to make bill-and-keep the more economically efficient pricing regime (FCC 1996c). This effort ended when the FCC opted to fold wireless-to-wireline interconnection into the proceeding to implement the interconnection provisions of the Telecommunications Act of 1996 (FCC 1996c). The FCC's interest in non-usage-sensitive pricing has continued to grow. Prompted by a pair of in-house studies supporting broader use of bill-and-keep regimes (Atkinson and Barkenov 2000; DeGraba 2000) and by the prevalence of peering regimes for backbone interconnection and flat-rate pricing for residential local telephone service, the FCC has begun exploring whether bill-and-keep can serve as the basis for reforming the entire regime of intercarrier compensation. In the process, the FCC specifically sought and received comments on whether transaction costs might justify flat-rate pricing (FCC 2001c, 2005c). 14 Symmetry in traffic exchanged costs may not provide the only explanation for backbone peering. The Internet depends on some ISPs generating complete routing tables for the Internet, in order to avoid circularity problems in which links simply direct traffic along paths that feed back into themselves. The transaction costs of coordinating routing tables go up as the number of core backbones increases. This suggests the existence of an optimal number of core backbones exchanging traffic on a settlement-free basis. This also suggests that other networks must be charged for terminating traffic in order to prevent them from free riding on the core backbones' efforts to maintain complete routing tables (Milgrom et al. 2000). Limiting peering to large backbones may also be 