FCC Role in IP Interconnection Emerging As Central Fight Within Telecom Industry

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By Paul Barbagallo  

Battle lines are being drawn over whether the Federal Communications Commission should regulate the interconnection of telecommunications networks that are based on internet protocol (IP) technology.

The issue has become a rallying cause for trade associations representing competitors to big phone companies like AT&T Inc. and Verizon Communications Inc. AT&T has been pushing the FCC to allow big phone companies to phase out their century-old networks of copper wires that wind their way through the country--and some of the “legacy” services offered over them.

Four trade groups--the American Cable Association, Competitive Carriers Association, COMPTEL, and the Computer and Communications Industry Association--wrote to the FCC last week to urge the agency to continue to impose the same interconnection and arbitration obligations on AT&T and Verizon, even while they build newer, all-IP, networks.

“The policy justifications for requiring ILECs [incumbent local exchange carriers] to interconnect their networks on reasonable and nondiscriminatory terms do not diminish simply because the technology for exchanging telecommunications traffic changes,” the associations said in a letter dated March 21. “To the contrary, the commission has explained in the context of the IP transition that '[f]or competition to thrive, the principle of interconnection … needs to be maintained.' ”

Negotiating Interconnection Pacts

Under the Communications Act of 1934, as amended, AT&T, Verizon, and all ILECs must negotiate interconnection agreements in “good faith.”

That requirement, the associations argue, “do[es] not vary based on whether one or both of the interconnecting providers is using TDM [time-division multiplexing], IP, or another technology in their underlying networks.” Specifically, Section 251(a) of the Act requires all telecommunications carriers “to interconnect [their networks] directly or indirectly with the facilities and equipment of other carriers,” without reference to the technology or protocol used in such networks. And, similarly, Section 251(b)(5) requires local exchange carriers “to establish reciprocal compensation arrangements for the transport and termination of telecommunications,” again without technology-based limitations, they noted.

But AT&T has said that any regulation of interconnection between two providers of IP-based services would be “needless and harmful.”

In a filing with the agency in late January, AT&T said the commission lacks authority under the act to regulate interconnection between two providers of IP-based “information services,” as retail voice-over-internet protocol, or VoIP, service providers and internet service providers are now classified. As written, Section 251(a) requires every “telecommunications carrier” to interconnect directly or indirectly with “other telecommunications carriers.” Providers of VoIP and other IP-enabled services are not telecommunications carriers, AT&T pointed out and, as such, Section 251(a) is doubly inapplicable where both the calling and the called parties are communicating via VoIP or similar IP services. Similarly, Section 251(c) does not apply to IP-to-IP interconnection because, among other things, information service providers have no interconnection rights under Subsection (c)(2), it said.

Should FCC Regulate?

Weighing in on the issue at a Free State Foundation conference last week, Robert Quinn, vice president of federal regulatory affairs for AT&T, said the FCC should allow markets to determine how IP traffic is exchanged, rather than move to enact new regulations.

“We were able to interconnect the entire world wide internet on an IP basis with no regulatory intervention from the states, from the [U.S.] federal government, or from any the governments across the entire world,” Quinn said.

Added Rebecca Arbogast, vice president for global public policy at Comcast Corp.: “I think we need to be very practical and grounded on what has actually worked in the real world. To muck that up would be a shame.”

FCC commissioners, too, have spoken out on the issue recently. Democratic Commissioner Mignon Clyburn, who is in line to become acting chairman of the FCC when current Chairman Julius Genachowski steps down, suggested in a speech March 15 to the Consumer Federation of America that IP interconnection for voice services is squarely in the FCC's statutory purview.

“Fundamentally, the commission expects that all [telecommunications] carriers negotiate requests for interconnection and exchange of voice traffic over the new internet protocol systems,” Clyburn said. “This will ensure that no consumer, regardless of what voice service system they use, is unable to communicate with those on other systems. Furthermore, even as carriers invest in this new technology, competitive and affordable alternatives must remain in place so that consumers have the option to choose what voice service best suits their individual communication needs.”

In her speech, she also tried to quell arguments that an FCC role in IP interconnection would constitute “regulation of the internet.” “Providers that are using IP to deliver voice service over their proprietary networks are not using the internet to do so,” she said.

Meanwhile, Genachowski, speaking at the first workshop of the agency's Technology Transitions Policy Task Force held March 18, reiterated that technological advancements “don't change the FCC's mission.” Instead, the agency must continue to be guided by a core set of principles: competition, consumer protection, universal service, and public safety.

“[W]hile some like to refer to the 'competitive, all-IP world' as if 'competition' and 'IP' are synonyms, we know that's not true,” he said. “We need to take a more sophisticated, data-driven approach to determine which policies to keep for today's markets, which to add or modify, and which to eliminate.”

For years, the FCC has been grappling with the regulatory classification of VoIP services, and could be compelled to make a final determination before settling the question of whether the interconnection provisions of the act apply to IP networks.