Tandem switching and transport are among the few line items on a small operator’s cost stack that get worse on their own. Fixed trunk and port costs spread over a shrinking base of TDM minutes push your effective per-minute cost up every quarter, and the larger carriers you interconnect with are simultaneously pushing IP NNIs — and in some markets filing to retire the very TDM tandems you route through today. If you are an ILEC or CLEC still hauling most interexchange traffic through a legacy tandem, the question is no longer whether interconnection moves to IP. It is whether it happens on your timeline or on someone else’s. What follows is a working checklist for making that move without breaking your settlements, your 911 routing, or your relationships with the TDM-only neighbors you still exchange traffic with. For where this fits in the bigger picture, start with our ILEC/CLEC pillar post.
The usual caveat, stated plainly: this is operator-to-operator background reading, not regulatory, tariff, or legal advice. Interconnection rights and cost-recovery mechanics depend on whether you are rate-of-return, price cap, or A-CAM, and on your state commission. Anything here touching NECA pools, access charges, or intercarrier compensation is general as of publication and varies by state and by your specific tariff. Confirm specifics with your NECA tariff advisor, regulatory counsel, or state commission before making filing or contract decisions.
Start with the interconnection agreements you already have
Before anyone draws an architecture diagram, pull every ICA you are party to and build a simple inventory: counterparty, effective date, term, renewal mechanics, and — most importantly — the change-of-law and intervening-law language. A surprising number of small-operator ICAs expired years ago and have been running evergreen on month-to-month terms nobody has re-read since. Those are the agreements a larger carrier will use as leverage when it proposes an “IP amendment” with terms written entirely in its favor.
Flag any agreement you adopted through a Section 252(i) opt-in. You inherited terms someone else negotiated for a different network and a different traffic profile, and they may say nothing useful about IP interconnection at all. The honest caveat here: whether Sections 251 and 252 obligations extend fully to IP interconnection remains contested ground, so how much statutory leverage you actually hold varies by state and by how your commission has ruled — do not assume you can compel arbitration on IP terms everywhere.
Know what the tandem is actually doing for you
Run a real traffic study before you negotiate anything. Break out, by trunk group: originating versus terminating minutes, direct versus tandem-routed traffic, and which distant carriers you only reach indirectly through tandem transit. The classic pattern is that two or three carriers account for the large majority of tandem-routed minutes, with a long tail of small counterparties you exchange a few thousand minutes a month with.
That distribution is your negotiating map. High-volume routes are candidates for direct IP peers; the long tail is what you keep a transit arrangement for. Be honest about the threshold math: a direct trunk group — TDM or IP — only beats tandem routing when the fixed cost of the facility is lower than the tandem switching and transport you avoid, and that crossover point moves as your minutes decline. A route that justified direct trunks five years ago may not justify them today.
What changes — and what doesn’t — at an IP POI
Moving to IP interconnection changes the plumbing more than the politics. You will still argue about where the point of interconnection sits, who hauls traffic to it, and who pays for protocol conversion when one side is still TDM. Expect the larger carrier to propose a small number of regional IP POIs — possibly none of them in your LATA — and to position transport to those POIs as your cost. Whether you can hold the line on a POI within your network depends on your ICA language and your state’s posture, and outcomes here genuinely differ from state to state.
Get specific on the technical annex: codecs and transcoding responsibility, DTMF handling, fax and modem traffic treatment, SIP signaling variants, and how calls that fail the IP path re-route. And be careful with terminology in the contract itself — a “SIP trunk” sold off a retail rate card and a carrier-grade NNI with defined capacity, SLAs, and symmetric obligations are very different instruments, and you want the second one. One limitation worth admitting: there is no single industry-standard IP NNI template, so expect every counterparty’s paper to look different.
Traffic that won’t follow you gracefully
Some traffic classes will not simply ride the new IP path. 911 trunks to selective routers — or ESInet connectivity where your state has moved to NG911 — are provisioned and governed separately, and your obligations there do not pause while you re-architect interconnection. Operator services, toll-free origination routing, and traffic exchanged with TDM-only rural neighbors all need explicit treatment in the migration plan rather than a footnote. We covered the compliance side of this in more depth in our LNP, E911, CNAM and STIR/SHAKEN compliance checklist.
The caveat: NG911 timelines are set state by state, and some 911 authorities are further along than others. Do not let a counterparty’s migration schedule dictate when your 911 routing changes — that sequencing belongs to you and your 911 system service provider.
Keep your settlement and filing posture intact
This is where small rate-of-return operators get hurt quietly. Traffic that migrates from switched access arrangements to commercial IP agreements can change how minutes are categorized, how costs are assigned, and what flows through your access tariff — with knock-on effects on pool settlements and your 499-A worksheet. Settlement outcomes vary by state and by your specific tariff, and pool participation rules change, so confirm current NECA guidance before relying on any assumption about how migrated traffic will be treated. Nothing about an interconnection migration should be presumed settlement-neutral until your tariff advisor says it is.
The same discipline applies to what you keep intact during the cutover itself — we walked through the filing and LATA-compliance side of switch modernization in NECA settlements, LATA compliance and FCC filings during switch modernization, and the principles carry over directly. As of publication, most terminating access has already transitioned to bill-and-keep under the ICC reforms, so for many operators the money at stake is on the cost side rather than lost access revenue — but originating access and transit arrangements remain messier, and that balance is specific to your study area.
A phased tandem-exit sequence
A migration that respects the realities above tends to follow this order:
- Traffic study and ICA inventory — the two artifacts every later decision references.
- Rank tandem-routed routes by minutes and model the crossover point for direct IP peers on the top two or three.
- Negotiate IP NNIs with the high-volume carriers first, keeping the TDM tandem path live as overflow during turn-up.
- Put the long tail on a transit arrangement rather than chasing dozens of tiny direct agreements.
- Move 911, operator services, and special traffic on their own tracks, coordinated with — not driven by — the interconnection cutover.
- Groom and decommission TDM trunk groups gradually, only after the IP path has carried live traffic cleanly through a full busy season.
If you are modernizing the switch itself at the same time, sequence the two projects deliberately — our phased switch migration playbook for independent telcos pairs with this checklist. One honest limitation: your schedule will be partly hostage to the counterparty’s NNI turn-up queue, which at the large carriers can run months. Build that lag into the plan rather than discovering it.
Talk it through with a wholesale partner first
Tandem exit is a multi-year project that touches contracts, settlements, and plant all at once, and the operators who come out ahead are the ones who map it before the first amendment lands on their desk. If you want a second set of eyes on your traffic study, your transit options, or your interconnect architecture, talk to our wholesale team — or call us at 844-450-3527. We work with small ILECs and CLECs on exactly this, and we will tell you plainly where a direct peer makes sense and where it doesn’t.
