ndates that the FCC establish a system of "reciprocal compensation" through which originating carriers could compensate other carri- ers for the costs they incurred terminating their calls (47 U.S.C. $ 251(b)(5)). The statute provides for reciprocal compensation based on a reasonable approximation of the costs incurred by each carrier. The statute specifically provides that it should not be construed to preclude bill-and-keep arrangements, in which each carrier recovers its costs from its own customers without receiving any additional payment from the other carrier (47 U.S.C. § 252(d)(2)(A)-(B)). In implementing these provisions, the FCC expressed skepticism about bill- and-keep, based largely on the concern that failing to compensate terminating car- riers for their costs might give originating carriers both the ability and the incentive to impose costs upon terminating carriers. As with club goods, the concern is that the resulting externalization of costs can lead to overutilization of the terminat- ing carrier's resources. As a general matter, the FCC thus regarded bill-and-keep regimes as "not economically efficient" (FCC 1996c, p. 16055). At the same time, the FCC acknowledged that circumstances may exist under which bill-and-keep may make economic sense. If the traffic exchanged between carriers is roughly symmetrical, the compensation that each carrier would pay the other for terminating its calls would simply offset that from the other. When that is the case, eliminating usage-sensitive pricing would not have any significant adverse impact on the carriers. At the same time, it might yield economic benefits by allowing both carriers to avoid the administrative burdens and transaction costs needed to create and implement metering regimes (FCC 1996c). In other words, the presence of transaction costs may well make flat-rate pricing the preferred institutional arrangement. Indeed, historical patterns suggest that bill-and-keep may make economic sense even when the traffic exchanged between carriers is not sy