Freeing Vonage from common carrier regulation would “clearly undercut” the ability of law enforcement officers to conduct electronic surveillance under the Communications Assistance for Law Enforcement Act (CALEA), the FBI and Dept. of Justice told the FCC in a joint filing earlier this week. The filing was one of more than 4 dozen commenting on whether the Commission should preempt a Minn. PUC ruling that Vonage’s voice-over-Internet-Protocol (VoIP) service was a telecom service subject to common carrier regulation.

Enhanced 911 legislation (HR-2898)could come to the House floor as early as today (Wed.), the National Emergency Number Assn. (NENA) said. The bill isn’t listed on the House Whip Notice, but a House source said discussions were going on late Tues. to determine whether the bill would get on the suspension calendar for Wed. If it were placed on the suspension calendar, it would have to get 2/3 of the House votes and no amendments could be offered. The bill, by Rep. Shimkus (R-Ill.), would allocate $100 million for 5 years toward deployment of E911 services. It also would prevent state legislatures that had raided E911 funds for other purposes from receiving federal help. The Administration has raised some concerns with the spending and has suggested that E911 funding come from other grants that already had been established (CD Oct 2 p1).

Telecom regulators need to assess costs along with benefits when producing new regulations, Progress & Freedom Foundation’s analysts said in a conference call with reporters Mon. “One large point is that certain things begin to be [considered] as unqualified goods and as costless,” PFF Pres. Ray Gifford said. The speakers cited a PFF study released earlier this month (CD Oct 16 p11) saying wireless telephone users could be charged more than $16 billion per year in fees that were intended to pay for federal regulatory mandates, such as local number portability (LNP), number pooling, Enhanced 911 (E911) and CALEA. “The agencies that are responsible for these regulations should be doing a decent job of estimating benefits as well as costs before they promulgate these regulations, which they are not doing,” said PFF Senior Fellow Thomas Lenard. He said the increase in costs associated with LNP would be $1.60 per customer per month and would total more than $12 billion over 5 years: “The question is whether the benefits are larger than costs.” The speakers agreed it wasn’t clear whether LNP would drive prices down as a result of increased competition. “It may lower the cost of switching, but depending on how much [consumers] are going to be charged for porting their numbers, it’s not obvious if it would lower the price,” Lenard said. There is “already a tremendous amount of competition” in the wireless industry “even without number portability,” with churn having reached above 30% and prices dropping 20% per year, Lenard said. He said it was unclear what would happen after the number portability went into effect Nov. 24 “because the market will adjust in various ways.” He said while costs of switching could go down, “carriers may change the terms of contract” to offset the losses. Gifford said it also was important to consider how LNP would affect market penetration. The PFF had estimated that fees based on regulatory mandates would price 8 million subscribers out of the wireless market, with 5 million due to LNP. “There is a lot of welfare lost,” Lenard said: “Several million people are being priced out of the wireless market -- that’s a substantial cost that needs to be laid against any benefits.” PFF Senior Fellow Randy May also expressed concern that the number of states and municipalities entering the telecom market as service providers rose 54% in less than 3 years: “Six years after the 1996 Act, we would want to see the trend going the other way.” However, he said the federal govt. shouldn’t prohibit state or local govt. provision of communications networks: “I think that states themselves should have that authority as a matter of policy.” He said there were “some situations in some places, which are rare,” when govts. should be able to get in the business: “Those places are likely to be more remote where there aren’t services being provided by a private sector. In those rare cases, it makes sense… for the government provision. But that’s really an exception.” On the Triennial Review Order, Gifford said it was “just a precursor of a series of federalism fights that we are going to have down the road because these are all issues where it is clear that the states line up differently than the feds.” For example, he said, states and the federal govt. had to resolve how state and local taxes would be applied to voice- over-Internet Protocol: “There are a host of issues that are going to have to be worked out between the states and the federal government, and the Triennial Review is just a first in the series where you are going to have this continuing tension between the states and the federal consensus.”

The Wash. Enhanced 911 Program opposed Vonage’s request that the FCC preempt the order of the Minn. PUC requiring Vonage to comply with state laws. “Preemption of the MPUC’s effectively removes Vonage’s obligation to provide access to E911 at the same level of quality provided by other telecommunications providers in the State of Minnesota, and Vonage’s obligation to remit fees for 911 service,” it said in comments filed with the FCC Fri. It said the FCC should: (1) Order Vonage to pay 911 taxes and fees used to support emergency services according to the amounts required of customers of local exchange carriers in the respective local jurisdictions. “Allowing Vonage to continue to avoid paying [E911 taxes and fees] means that emergency 911 centers throughout the United States are not being compensated for the critical assistance they are providing to Vonage customers,” the organization said. (2) Declare the voice service that Vonage provides via IP to be classified as a telecom service. (3) Set criteria and timelines for Vonage and other VoIP providers to follow that will provide users with the “same or better access to 911 services as is available today from local exchange carriers.” It said the 911 community could “be at risk” if the FCC decided Vonage provided an information service: “The Commission must ask if the simple transition from one technology (circuit switched) to another (packet switched) results in the reclassification of a service. The service itself is not changing. Only the technology is changing… Technological improvement should [not] result in service reclassification,” which, it said could cause “the funding support mechanism for 911 services… shrink dramatically or evaporate completely.”

Network vulnerability is a critical issue that needs to be addressed when building a new voice-over-Internet protocol (VoIP) network, several speakers agreed at a FCC Technological Advisory Council (TAC) meeting Mon. in Washington. Consultant Stewart Personick said “from an engineering perspective,” protecting networks from terrorist attacks was “one of the most difficult issues we face… Shall we duplicate the networks that are vulnerable tomorrow as they are today given that… attackers are more difficult than they were before?” MCI’s Vint Cerf agreed, saying “pressure to create resilient [networks] will be driven by applications of VoIP… Fundamental communication and connectivity is a critical part, and their resilience is more distinct.”

The Center for Public Integrity (CPI) in a report Mon. said wireless companies had charged consumers $629 million in fees since Jan. 2002 that were intended to pay for federal regulatory mandates. The report focused on local number portability (LNP), but the “regulatory recovery fee” also included Enhanced 911 (E911), CALEA and digital TTY service. The FCC’s deadline for LNP is Nov. 24, although some in the wireless industry say the Commission still hasn’t announced enough guidance on LNP implementation. CTIA said wireless carriers were within their right in attempting to recover LNP costs. The CPI report gave some details on collection and expenditures associated with LNP, but said several companies wouldn’t disclose what they intended to spend. Alltel and T- Mobile didn’t reveal how much they had spent so far Nov. 24 on LNP and they -- along with Nextel, Sprint and Verizon Wireless -- wouldn’t announce how much they planned to spend after that date, the CPI report said. The report said some of the smaller wireless companies said they had spent more on developing an LNP system than carriers with larger subscriber bases. Nextel already has spent $100 million on its 10.6 million subscribers, while Verizon Wireless said it needed to spend only $60 million to serve its 32.5 million customers, the CPI report said. The report also showed how much carriers charged consumers for regulatory recovery fees. AT&T Wireless charges the highest regulatory fee -- $1.75, Nextel $1.55 and Sprint $1.50. T-Mobile charges no regulatory fee and Verizon Wireless charges only a $0.05 fee, all of which it said was used for number pooling. AT&T Wireless and Nextel didn’t disclose how much of their regulatory fee went toward LNP or number pooling, but Sprint said $1.10 of its $1.50 fee went to LNP or pooling, the report said. The report, which is written like a news story, also featured comments from FCC Wireless Bureau Chief John Muleta. The FCC doesn’t regulate prices and allows the marketplace to control how much carriers can charge for regulatory reimbursement, the CPI report quoted Muleta as saying. Some companies might include marketing costs as part of the regulatory fee, he was quoted as saying. CTIA said the Progress & Freedom Foundation projected that LNP would cost $1 billion in the first year and $850 million in the 2nd year to implement the technical system. “Wireless carriers are completely within their rights, as defined by the FCC, to recover their costs for number portability implementation,” a CTIA spokesman said. “In the highly competitive wireless industry -- prices have fallen 80% in 8 years -- costs generated by government programs are often passed on directly to consumers.”

The FCC released an order late Fri. to give small rural wireless carriers time to demonstrate their difficulties in meeting Enhanced 911 (E911) requirements. The order establishes a 6-month process for Tier 3 carriers -- defined as those with fewer than 500,000 subscribers -- to present their case to the FCC. Many Tier 3 carriers have asked for various types of relief from the FCC’s accuracy and reliability standards for Phase 2 of the E911 rollout, which requires cellphones to give emergency operators the approximate location of a caller. But while the FCC said it would review each carrier’s petition on a case-by-case basis, its tone on carriers’ requests was skeptical. While demonstrating its willingness to help individual carriers that face technical and economic challenges, the Commission cautioned that, due to the overwhelming public interest benefits of E911 service, “these carriers face a heavy burden when seeking a further stay of their E911 service obligations… The Commission will only grant carriers relief from their E911 obligations when extraordinary circumstances exist.” The FCC’s order appears to address a provision in an E911 bill moving its way through Congress. The bill, HR- 2898, by Rep. Shimkus (R-Ill.), would require the FCC to make considerations for Tier 3 carriers. The bill has been passed by the House Commerce Committee, but hasn’t been scheduled for a floor vote (CD Oct 2 p1). A Senate version, S-1250, has passed the Commerce Committee in that chamber.

Toyota weighed in at the FCC on Enhanced 911 rules, saying the regulations shouldn’t be extended to embedded telematics services and devices. OnStar has made similar arguments to the Commission, saying telematics units embedded in cars shouldn’t be treated the same under FCC E911 rules as a conventional wireless handset. Last year, OnStar asked the agency for a declaratory ruling on the extent to which telematics units embedded in vehicles were covered under Enhanced 911 rules. In a filing last week, Toyota said making embedded telematics devices and services meet E911 “would likely require equipment manufacturers to engage in a complete redesign of their respective telematics systems, requiring an investment of thousands of engineer hours, and pointed out that manufacturers are already facing a heavy burden in the transition to digital technology for telematics units.” Toyota said it offered an embedded telematics service in certain Lexus models, based on OnStar design specifications. OnStar, in turn, provides the underlying telematics call center service. Toyota raised concerns that the cost of complying with E911 rules would require such expensive new equipment design that some equipment-makers might exit the sector altogether. Toyota also said the FCC had “questionable jurisdiction” in that area because telematics systems weren’t a “commercial mobile service” under the Communications Act: “Telematics is an information service that makes use of telecommunications services.”

Public safety groups questioned Enhanced 911 Phase 2 waiver petitions filed at the FCC by small rural carriers, telling the agency last week that they had “appeared on the FCC’s doorstep like autumn leaves.” The National Emergency Number Assn., the Assn. of Public-Safety Communications Officials (APCO) and the National Assn. of State 911 Administrators said: “The theme of these requests, however, is not relief from accuracy standards but more time to implement Phase 2’s present requirements.” Among the waiver petitions cited by the filing was one by the Rural Telecom Group (RTG), which asked the Commission for a limited stay of Phase 2 deadlines for the smallest wireless carriers, saying most of them couldn’t meet accuracy mandates using a network- based solution for Phase 2. RTG suggested a new category for E911 compliance, composed of the smallest wireless carriers - - those with 100,000 or fewer subscribers. The FCC received a flurry of petitions last month seeking temporary waivers of E911 Phase 2 obligations, particularly a Sept. 1 deadline for starting to sell automatic location identification (ALI)- capable handsets. In the case of a waiver petition by First Cellular of Southern Ill., the request for Phase 2 relief doesn’t lay out “a clear path to full compliance,” the public safety groups said. They said the petitions involved several contingencies based on different solutions. “It would be easier to accept the requested 24-month delay if the path forward were more certain,” the groups said. They also said they weren’t able “to judge the accuracy of the rural wireless carriers’ claims that they are at the end of the line for supply of available handsets from manufacturers and are victimized by ‘exclusive’ arrangements between manufacturers and national carriers. We trust that the FCC will call in the manufacturers to attempt to separate truth from rhetoric in these matters.” The groups said some small carriers had reported to the FCC in recent months that handsets were available to them in enough numbers to meet E911 penetration and accuracy requirements.

The coordinating council for 911 emergency responders in the Kansas City (Kan.) Metro area voted to fire SBC as their E-911 database manager and set up their own system for routing 911 calls and providing area dispatch centers with current location information on 911 calls. The MidAmerica Regional Council (MARC) voted to spend $1.8 million on the communications and information hardware to manage its own E- 911 database. The council cited chronic problems with missing records, slow error correction, poor quality control, inadequate coordination with telephone carriers, poor documentation of database changes and inconsistent data formats. It termed SBC’s database management “sloppy” and said that can’t be tolerated when life and property are at risk. The council said that when they wanted to directly update the E-911 database, SBC refused access. SBC denied the mismanagement allegations, saying it provides more than 500 E-911 systems with quality database management services. SBC said it denied MARC direct database access because of sensitive information such as unlisted phone numbers. In order for MARC to accomplish its intention, it must get state certification as a telecom carrier in both Kan. and Mo., and negotiate interconnection agreements with SBC and other telephone carriers, but MARC estimated the move would save $1.4 million annually on 911 maintenance costs.