Question of IP Trial Timing Looms Large a Year After AT&T Petition

Republicans called for rule changes. House Communications Subcommittee Chairman Greg Walden, R-Ore., emphasized in opening remarks a need to look at “the practical impact of the rules in an uncertain future.” House Commerce Chairman Fred Upton, R-Mich., slammed laws “written piecemeal to reflect the prevailing conditions of their time.” Changing laws need to reflect the technologies and competitive dynamics, said subcommittee Vice Chairman Bob Latta, R-Ohio. “It is our responsibility for how we create the appropriate environment,” said Rep. Marsha Blackburn, R-Tenn., regarding regulators and disparate treatment of different technologies. She urged a “seamless” IP transition.

In its comments and replies to the FCC, AT&T said the first step in doing a trial is for a telco to give the FCC a “detailed plan” that the agency can put out for public comment. The plan should identify the geographic region where the company would discontinue TDM service, outline the alternative service offerings and name the legacy regulations that might need to be changed, it said. The FCC hasn’t received such an IP trial plan. AT&T is still working on such a detailed plan that it hopes the FCC will incorporate into a trial, a spokesman for the telco told us.

"The ongoing technology transitions promise tremendous benefits for consumers,” an FCC spokesman told us Wednesday. “At the same time, we must preserve and advance the core values reflected in the Communications Act: consumer protection, universal service, competition, and public safety. We look forward to exploring the best ways to expedite the transitions and advance our values in the technology transition trials the FCC sought comment on earlier this year."

Subcommittee ranking member Anna Eshoo, D-Calif., asked Cicconi how new network technology changes the state of competition. “I've always favored technology being neutral in whatever legislation we do,” she said. But Cicconi argued today’s various communications services are competitive and reiterated differing regulations that fall on different services.

Cicconi is right, said House Commerce ranking member Henry Waxman, D-Calif.: “But I caution against using the advent of IP-based services as a vehicle to try to undermine the FCC’s authority to preserve competition and protect the public.” He pointed to universal service and competition as major priorities as well as consumer protection. “The market needs oversight,” Waxman said of certain issues such as emergency communications.

"We need to stop thinking of this as AT&T’s transition,” said Public Knowledge Senior Vice President Harold Feld, a witness at the hearing. But “to everyone’s surprise, Public Knowledge and AT&T agree on a lot,” he said. He criticized the way the debate has evolved into whether people want network upgrades or not -- an “absurd” proposition since everyone wants them. “We are not against AT&T,” said Mark Iannuzzi, president of TelNet Worldwide, testifying for Comptel. “We are not against the ILECs.” The competitive carriers are for competition and the “rule of law, which means trust,” he said.

"It seems to me the FCC is approaching this issue methodically and thoughtfully,” Waxman said of potential IP trials. Feld agreed. Cicconi noted the “leadership change” under way at the FCC has affected the timing of trials. “We filed our petition almost a year ago,” Cicconi said. “We asked them to actually set up the trials. This isn’t an AT&T project, as someone said earlier. ... I don’t think not having trials is an acceptable answer.” The FCC waited six months after AT&T filed its petition “to actually ask the questions” in a proceeding, Cicconi added. Commissioners Ajit Pai and Jessica Rosenworcel have voiced support for trials, as has National Broadband Plan architect Blair Levin, Cicconi said, urging the FCC to design the trials. “I'm pretty confident that once Chairman [Tom] Wheeler gets there, that’s what'll happen."

"I don’t need to be as delicate as Mr. Cicconi needs to be,” said Free State Foundation President Randolph May, calling the FCC “a little slow” in getting trials under way. May supports the idea of trials but cautioned that they “can be used to delay the ultimate decisionmaking. That shouldn’t be allowed to happen with these projects.” But Iannuzzi called the prospect of the trials a “boondoggle” and questioned what stakeholders would really gain from them. “You can take anything and make it sound more difficult,” Iannuzzi said. Yet AT&T cannot convert a wire center from TDM to IP without FCC permission, Cicconi countered.

The hearing showcased a dispute over how AT&T prices TDM services. Effective Nov. 9, AT&T will no longer offer new plans longer than 36 months for tarriffed TDM services, which Sprint and others protested in an Oct. 18 letter to the FCC (http://bit.ly/17Ja0Ps). “AT&T’s latest effort to raise rates on business customers, both small and large, by eliminating longer term discounted rates, is a prime example of the telecom giant’s massive market power,” said former Rep. Chip Pickering, R-Miss., a spokesman for The Broadband Coalition, in a statement Wednesday. “AT&T’s vision of the future would slam the garage door on new ideas and undermine substantial investments made to offer robust communications services to businesses along the last mile of our telecommunications infrastructure.” Pickering didn’t testify and urged preserving last-mile access and technology-neutral interconnection amid the IP transition.

The coalition represents CLECs on the broadband side, and it makes sense the coalition would slam AT&T for this reason, Information Technology & Innovation Foundation Senior Research Fellow Richard Bennett told us. Bennett attended the hearing but did not testify. As companies move away from TDM to IP, the cost of providing TDM becomes more expensive, he said. Sprint, one of the companies that objected to AT&T’s business rate changes, has a lot of legacy equipment it will eventually have to replace with ethernet, he said. Sprint is not a coalition member, a coalition spokesman told us. Sprint wants to defer the “financial penalty” it will have to pay, he said. The carrier has said it intends to up its fiber backhaul over ethernet next year.

Bennett called the hearing “typical” in that it dug into high-level topics but “didn’t get into any of the specifics,” which may be more palatable. “Ethernet’s very well understood,” he said. Cicconi called ethernet “very competitive” and questioned whether the market would require regulation.

The transition “has effectively taken place” already, said Everett Ehrlich, former undersecretary of commerce in the Clinton administration, in a statement Wednesday. “Let’s provide for the smartest and most effective consumer protections while accelerating the full deployment and universal adoption of IP broadband networks.” Ehrlich didn’t testify. Stakeholders have a choice to embrace the transition and “afford all companies competing in this industry uniform rules so we can fully realize the benefits that lie ahead,” he said.

"I love AT&T and I love Verizon and I love the CLECs and all the independents out there, but what I really love is consumer choice,” said Rep. Joe Barton, R-Texas. “Our job on the committee is not to protect an existing market segment.” The world of the 1996 Telecom Act doesn’t exist anymore, he said. Rep. Frank Pallone, D-N.J., asked Cicconi about how AT&T’s new fiber will withstand hurricanes and other disasters as compared with copper. Fiber differs in terms of how power sustains it, Cicconi replied. But he noted that seawater destroys copper and fiber is “very resilient.” Of the broader transition and technology, Cicconi said, “Frankly, we can help it evolve if we know what we're trying to do.”