FCC's Wheeler Aims to Ease Phone Service Transition

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By Lydia Beyoud

July 10 — FCC chairman Tom Wheeler teed up what could be a big win for competitive telecommunications service providers in announcing proposals for new rules ensuring large carriers like AT&T Inc. and Verizon Communications Inc. can't hike wholesale prices when they replace their copper lines with fiber or other alternatives.

In a July 10 fact sheet, the Federal Communications Commission outlined proposals to ensure consumers and competitive carriers are protected during the ongoing transition away from traditional network infrastructure to Internet protocol-based alternatives, known as the IP transition. Wheeler is circulating the proposals to his fellow commissioners. The FCC is expected to vote on them at its Aug. 6 monthly meeting.

The first proposed item, consisting of a report and order, order on reconsideration and further notice of proposed rulemaking, would also seek to provide greater certainty for carriers by formalizing the criteria the agency uses to evaluate and compare replacement and legacy services, Wheeler said in a blog post.

Nearly 75 percent of U.S. households were either wireless-only or were already served by IP-based voice services by 2013, according to a 2014 study by the USTelecom Association.

If approved, the proposals would grant one of the major requests of COMPTEL, the trade association representing competitive carriers. COMPTEL members have expressed concerns that without action by the FCC, incumbent carriers would have free rein to modify the prices, terms or conditions they offer to competitive carriers.

Many of the competitive carriers lease last-mile access services from incumbents at wholesale rates in order to offer broadband and other services to thousands of small and mid-sized businesses, schools, business parks, health-care facilities and other institutions.

Wheeler said his proposal would grant such companies “an interim solution” by requiring replacement services to be offered at “reasonably comparable” rates, terms and conditions of those of legacy networks. The FCC is working on long-term requirements as part of a separate wholesale access proceeding.

The proposal would also grant another major request by COMPTEL—as well as consumer interest groups—in requiring incumbent carriers to give six months notice of a switch to IP-based lines to nonresidential customers and three months notice to residential customers. The trade group was enthusiastic about the announcement. “By including reasonably comparable wholesale access provisions in the tech transitions, the FCC will take an important step to ensure competition continues across all technology networks and platforms,” Chief Executive Officer Chip Pickering said in an e-mailed statement.

The FCC's effort to modernize its rules to facilitate the technology transition should help the industry and consumers move to fiber and IP technology networks, USTelecom Senior Vice President Jon Banks said in an e-mailed statement.

“The FCC’s focus on retail customers is important, and we look forward to working with the commission to ensure that they successfully transition to new and better networks and services,” he said.

However, the trade group, whose members include AT&T and Verizon, said it questioned whether the FCC's provisions regarding wholesale rate protections were necessary.

“We understand the commission’s concern with competition in enterprise markets, but given the degree of competitive service choices available, mandates that new services be reasonably comparable to legacy services threaten to complicate and delay the transition without providing any significant counterbalancing benefit,” Banks said.

Backup Power Options

A separate report and order would address the issue of backup power solutions for IP-based networks when electricity goes out. As proposed, the rules would require providers to offer for purchase a technical solution that provides eight hours of standby backup power for voice phone services, either directly or from a third-party retailer. Consumers would be able to decide whether to purchase that backup power.

Voice service providers would have to upgrade that offering to include an option for 24 hours of standby backup power within three years of the effective date of the approved order.

Providers would also have a requirement to notify current and new customers about service limitations of the upgraded phone lines during power outages.

The item would confirm that AT&T and Verizon can pull out their old copper lines without having to seek FCC approval, so long as they alert customers ahead of time and there is no service disruption, reduction or impairment.

Consumer advocacy group Public Knowledge said Wheeler's proposals “clearly make certain that the transition of the nation’s communications network is not an upgrade for some and a downgrade for the rest of us.”

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Text of the FCC fact sheet is at http://op.bna.com/der.nsf/r?Open=jkid-9yal9s.

Text of Wheeler's blog post is at https://www.fcc.gov/blog/advancing-technology-transitions-protecting-consumers-competition-and-public-safety-ip-world.

Text of the USTelecom study is at http://www.ustelecom.org/sites/default/files/documents/National%20Voice%20Competition%202014_0.pdf.