On November 7, 2012, AT&T petitioned the FCC to make regulatory changes that would support private investment in wireless and wireline networks, including upgrades to broadband IP-technology.
The general theme behind AT&T’s petition is that AT&T, unlike some among its competitors (cable companies like Comcast, or wireless-only carriers like T-Mobile), is subject to obsolete rules on “dominant” Incumbent Local Exchange Carriers (ILECs) that were passed when cable companies delivered only TV services (not the triple-play service they offer now), and there were no wireless broadband networks for users to move to after “cutting the cord” with their ILEC. AT&T is thus asking to remove rules that stifle its incentive to invest in broadband that are no longer needed in today’s competitive marketplace. The repeal of such rules would thus be a win-win proposition.
In a November 13, 2012, speech at the NARUC Annual Meeting, AT&T Senior Executive Vice President Jim Cicconi referred to the petition saying that AT&T’s proposed “trial runs” of transitioning wire centers volunteered by incumbent telephone companies would “inform the FCC as to the limited and competitively neutral regulation that might be warranted in the IP-only world toward which we’re headed.” (TR Daily, Nov. 14, 2012)
Let’s look at AT&T’s specific petitions one by one:
- Section 214 requires an ILEC to obtain the FCC’s approval before discontinuing wireline service in a given geographic area. The FCC approval’s is meant to ensure “that neither the present nor future public convenience and necessity will be adversely affected [by the ILEC’s service discontinuation.” AT&T is asking the FCC to state openly that AT&T does not need to ask for the FCC approval when AT&T is only upgrading to an all-IP network in the community — no discontinuation of service.
This petition seems hardly controversial — it cuts the red tape (the approval process may take months) and speeds broadband deployment when the community is not at risk of losing telephone service.
- When an ILEC decides to go all-IP, it must notify other networks it interconnects with about its plans. An interconnecting network using legacy technology can ask for a delay of six months. AT&T is only asking that the six months start running from the ILEC’s “notice-of-network-change” to interconnecting, not the FCC issuance of a public notice, which may inject further delay in the upgrade.
Again, this petition simply speeds broadband deployment by cutting red tape.
- Some Federal and state-level universal service obligations on ILECs force ILECs to incur capital expenditure to maintain legacy networks (for instance the requirement to provide “dial tone” services to end-users or to maintain unused copper loops). These rules limit the resources the ILECs can invest in all-IP network. AT&T is asking the FCC to amend universal service obligations to make them support, rather than hinder, transition to all-IP broadband networks.
Universal service reform is needed. All agree on this, except perhaps those industry players (cable companies, wireless-only carrier) who benefit from having to compete with ILECs handicapped by obsolete universal service obligations. AT&T’s asking for faster reforms seems fair; however, end users would not ultimately benefit from rushed solutions.
- IP-based services, including voice telephony (VoIP) are classified as interstate services, so only the FCC can regulate them, not state public utility commissions. AT&T asks that this classification be confirmed.
Skeptics may fear that behind this request there is a desire by AT&T to avoid state-level access regulation for legacy voice telephony.
Indeed, the AT&T petition states that “The threat that regulators will impose even IP-oriented (but provider-specific) service requirements also can discourage ILEC investment in all-IP networks. For example, such requirements may be accompanied by price regulation.”
The transition to all-IP networks has already rendered obsolete some rules that AT&T asks the FCC to repeal, such as AT&T’s obligation to separate local from long-distance contract terms in its retail offers (this is a legacy of the ATT break-up still alive many years after we all stopped worrying about whether a call is local or long distance — they all cost the same) or the “carrier-pre selection” rule that made it easier to MCI and other companies to compete for the long-distance part of the end-users’ bill (the “dialing parity” rule is still in place).
Wholesale access regulation in an all-IP world is a complex problem. In its petition, AT&T proposes to pick some locations and start testing the transition to next-generation services, to see in practice what technical and economic issues arise. This proposal seems very reasonable, and it should appease skeptics.