Views Vary on FCC Role As Regulator in All-IP World

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By Paul Barbagallo  

The telecommunications industry is sharply divided on whether the Federal Communications Commission should regulate the high-capacity protocol-based fiber-optic networks of tomorrow the same way it has the copper-based public switched telephone network, with large incumbent players, like AT&T Inc. and Verizon Communications Inc., opposing new FCC regulations and smaller rivals supporting them.

In lengthy comments filed with the FCC Jan. 28, views varied on the role the commission should play as phone companies continue building all-internet protocol (IP) networks capable of offering consumers internet phone service, as well as digital video and high-capacity internet access services.

The commenters, a diverse cross-section of the industry, specifically addressed two petitions filed last November, one by AT&T and the other by the National Telecommunications Cooperative Association (NTCA), a group that represents rural providers.

In short, the AT&T petition calls on the FCC to establish test zones where regulations left over from the Ma Bell era should no longer apply. According to the company, the rules underpinning the old monopoly telephone network should expire with an industry-wide transition to IP, and the FCC should declare that these new networks are “subject to minimal regulation only at the federal level.”

The National Telecommunications Cooperative Association petition requests an agency rulemaking to “examine means of promoting and sustaining the ongoing evolution of the public switched telephone network…to an IP-based infrastructure through targeted regulatory relief and the establishment of tailored near-term economic incentives.” Such incentives should include allowing phone companies to recover the costs of carrying IP traffic on their networks and providing “sufficient and predictable” universal service support for providing “standalone” broadband internet service to rural America, the NTCA said.

“It is critical that the commission not permit legacy regulatory obligations--designed for a far different communications landscape--to further delay that transition,” AT&T wrote in its comments Jan. 28. “The commission should reject proposals to bog down the…IP transition with interminable and abstract deliberations about the appropriate regulatory end-state at the conclusion of the transition. Instead, the commission should promptly begin the limited regulatory trials proposed in AT&T's petition and use the real-world data generated by those trials to inform the commission's approach to broader reforms.”

Currently, the FCC regulates telecommunications providers under Title II of the Communications Act, wireless carriers under Title III of the act, and cable operators under Title VI, even though the distinctions between these companies have blurred as telecom providers now offer video service, cable operators now offer voice service, and wireless carriers offer both voice and data service. Of the three provider “types,” the telecom providers--successors to the Bell monopoly that was broken up by court order in the 1980s, including today's AT&T and the local-phone units of Verizon Communications Inc.--are required under state law to offer service to every residence. They must meet standards for providing a quick dial tone, a sure connection, and resiliency during storms and power outages. Newer competitors offering phone service over fiber-optic or internet connections, including Comcast Corp., do not have to abide by the same rules.

AT&T and Verizon also still must maintain their copper phone lines, whether they upgraded to fiber optics or not, which the two companies say skews the playing field.

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

IP Interconnection a Thorny Issue

Among the pressing questions for the FCC is whether the old rules governing the interconnection of telecommunications networks should now carry forward in an all-IP world.

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

“Unregulated commercial arrangements between IP networks are nothing new; they have long ensured efficient 'IP interconnection' and led to the phenomenally successful modern internet,” the company wrote. “There is no reason to expect a different result once all voice communications ride over converged IP networks.”

In addition, AT&T said, the commission lacks authority under Title II of the Communications Act to regulate interconnection between two providers of IP-based “information services,” as retail voice-over-internet protocol (VoIP) services providers and internet service providers are now classified. Section 251(a) of the act requires every “telecommunications carrier” to interconnect directly or indirectly with “other telecommunications carriers.” AT&T argued that providers of VoIP and other IP-enabled services are not telecommunications carriers. As such, Section 251(a) is therefore doubly inapplicable where both the calling and the called parties are communicating via VoIP or similar IP services, it said. 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 added.

As for other provisions in the Communications Act, Section 201 “cannot plug a jurisdictional hole” because it is restricted to relations between providers of Title II “common carrier” services, AT&T explained.

COMPTEL, a Washington-based trade organization for smaller telephone companies that compete with AT&T and Verizon Communications, disagreed.

In its comments, COMPTEL pointed out that incumbent local exchange carriers have a duty to negotiate interconnection agreements in “good faith,” regardless of whether the networks interconnecting are copper-based or IP-based.

“As the commission explained [in its ICC Transformation Order, adopted October 2011], the 'duty to negotiate in good faith has been a longstanding element of interconnection requirements under the Communications Act and does not depend upon the network technology underlying the interconnection, whether TDM [time-division multiplexing], IP or otherwise,” COMPTEL wrote.

“The most important step the commission can take to promote the transition to an all-IP PSTN [public switched telephone network] is to confirm that IP interconnection is subject to Sections 251 and 252 of the Act,” the organization said. “This confirmation alone would give competitors a framework to negotiate fair terms for interconnection with incumbent local exchange carriers, thereby accelerating the transition to an all-IP network. Interconnection agreements were a foundational stepping stone for competition from the beginning, and a change in technology does not change the need for them.”

At the very least, COMPTEL said, the commission should require incumbents like AT&T and Verizon to enter into IP interconnection agreements with each impacted competitor, which are compliant with Sections 251(c) and 252, publicly filed, and available for opt-in--before being allowed to shut down its copper network, “even for a test.”

The Competitive Carriers Association (CCA), which represents small wireless carriers, agreed, saying the FCC must reaffirm incumbents' obligation to interconnect their networks and exchange traffic on “just, reasonable, and cost-based terms and conditions.”

“Ensuring a seamless transition…to IP-based networks is an important priority for our national telecommunications infrastructure, but the commission shouldn't reinvent the world of telecom,” Steven Berry, CCA president and CEO, said in a news release Jan. 29. “The certainty provided by provisions such as the interconnection requirements of Sections 251 and 252 of the [Communications] Act facilitate investment and growth in the wireless marketplace.”

Deregulation is appropriate, Berry continued, when there is an overarching regulatory framework providing carriers certainty to invest and deploy service.

“AT&T provides a sensible approach with respect to some outdated regulations,” he said. “But it makes no sense for the commission to eviscerate the long-standing interconnection policy and framework. In fact, compelling interconnection as the fundamental prerequisite fostered a competitive market, allowing operators to enjoy 'light' regulatory treatment.”

Weighing in on the matter, the Independent Telephone and Telecommunications Alliance (ITTA), which represents mid-sized phone companies such as CenturyLink and FairPoint Communications Inc., said any IP-based interconnection obligations should be limited to situations where IP networks already have been deployed.

There should be no obligation for providers to interconnect on an IP basis if it means deploying new technology to replace existing equipment or facilities, the organization told the FCC in comments Jan. 28.

“The transition to IP networks is happening nationwide in an organic fashion as incumbent local exchange carriers upgrade their legacy equipment,” the alliance wrote. “Yet even so, the IP transition will require incumbents to invest billions of dollars, which cannot be done overnight. It is settled law that the FCC can require access 'only to an incumbent LEC's [local exchange carrier's] existing network--not to a yet unbuilt superior one.' ”

More broadly speaking, the ITTA said the commission should rely on industry guidelines to govern IP-to-IP interconnection obligations, while preserving the option for providers to pursue resolution of controversial matters through the FCC enforcement processes.

“Given that the…IP transition is an ongoing and evolving process, it makes sense for the commission to take a light regulatory approach and allow IP interconnection rules to develop over time as the marketplace and networks evolve,” the alliance said.

In comments, Free Press lashed out at AT&T for trying to push the commission into a “state of veritable regulatory limbo.”

Cable: FCC Oversight, but No New Retail Regulation

As for the cable operators' views, the National Cable and Telecommunications Association (NCTA) offered support for the AT&T proposals to begin phasing out legacy network equipment, but said FCC oversight will be essential to ensure long-term success.

“This technological transformation generally should not trigger any need for new retail regulation,” said NCTA, whose members provide phone service to more than 26 million households in the country, the vast majority of which through IP-based equipment.

The association noted that the FCC already has extended many of the key elements of the Title II regime to VoIP providers, including “911,” outage reporting, local number portability, privacy, and disabilities access.

“These decisions ensure that consumers that switch to VoIP services--whether provided by incumbents or competitive providers--are provided with the same protections as consumers of traditional phone services,” the association wrote.

But, to public interest organizations, the transition to IP is an important consumer issue, first and foremost, which the FCC should not take lightly.

In comments, Free Press lashed out at AT&T for trying to push the commission into a “state of veritable regulatory limbo.”

“Because AT&T has previously convinced the commission that the mere use of IP places a service outside of the laws governing two-way communications networks, the otherwise unremarkable progression of telecom technology from circuit to packet switching could now, under the commission's current framework, result in a state of total deregulation,” Free Press wrote.

Public Knowledge likewise raised caution flags, outlining “five fundamentals” of the current telephone system that the FCC should uphold throughout a transition to IP.

First, the commission must ensure that the benefits of internet technologies flow to all Americans--regardless of race, color, religion, national origin, or sex.

Second, competing networks must continue to accept each other's traffic and terminate each other's calls in a manner that “both preserves call quality throughout the country and actively promotes a robust and competitive environment.”

Third, the commission must ensure that consumers are protected by resolving their complaints--both throughout and after the IP transition.

Fourth, the FCC and industry must provide some surety that, even in a natural disaster, consumers will be able to make phone calls and stay connected.

And fifth, consumers should be able to call 911 in any emergency with confidence that the call will be connected.

“We stand at the current crossroads not because the commission lacks authority to act, but because the commission refuses to act,” Public Knowledge wrote in its comments. “AT&T is absolutely right to demand certainty as it embarks on a multi-billion dollar upgrade of its systems. This lack of certainty comes because the commission has failed to resolve the numerous proceedings pending before it that would answer the fundamental questions of the IP transition. In particular, the FCC's stubborn refusal to classify [VoIP], or at least facilities-based 'interconnected' VoIP, as a Title II telecommunications service has created a confusing hodge-podge of asymmetric responsibilities of dubious enforceability. The treatment of identical services turns too often on irrelevant differences in technology or provider. This invites arbitrage and confusion, privileges some providers while disadvantaging others, and leaves consumers vulnerable to abusive billing practices and shoddy service. Whatever virtue existed in delaying critical decisions to another day has clearly ended. The IP transition is no longer a hypothetical matter taking place in the distant future. It is upon us.”

Filings in docket 12-353 can be found at

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