Customs Duty

Consumers could end up paying more for less if openness regulations apply to wireless networks, speakers said Wednesday at an American Enterprise Institute panel on network management. Regulation is not the only way to protect users and could stifle the wireless market, they said.

The FCC would face change if Sen. John Rockefeller, D- W.Va, were to chair the Senate Commerce Committee, said Hill and industry sources. Speculation arose about Rockefeller temporarily assuming the chairmanship a few weeks ago, after Sen. Robert Byrd, D-W.Va., was hospitalized. But Byrd was back on the Senate floor immediately after his release from the hospital, and has made clear he isn’t ready to yield his duties yet.

NTelos Media asked the FCC to let it out of Emergency Alert System obligations until year-end, saying software it uses to offer IPTV services still can’t handle the duties. NTelos planned to have an EAS compatible version of Microsoft IPTV software it buys from Alcatel-Lucent installed by April 1, but learned recently from vendors that it’s behind AT&T in line for the upgrade. That could mean months, the company said. “It is unrealistic to think that a company as small as NTelos with limited technical resources and a small number of IPTV customers can expedite this upgrade if AT&T has failed to do so,” it said.

AT&T Mobility will refund up to $10 million total to thousands of Floridians billed for wireless ring tones and other third-party services pitched as free, under a settlement with Florida Attorney General Bill McCollum. He said his office is investigating similar third-party billing complaints against other wireless carriers and will seek refunds from them, too. AT&T also must pay the state a $2.5 million penalty and put $500,000 toward educating customers about third-party wireless add-ons. McCollum said the deal settles thousands of complaints that his office and AT&T had received about third-party services advertised on the Internet as free. When customers downloaded them to cellphones, however, charges appeared on their wireless bills without clear information on what they were for or how to unsubscribe, McCollum said. He said his office pursued AT&T, not third-party vendors, because AT&T has a duty to customers to police third-party services billing through it, and because it was easier to go after that big company than scores of small fry. He said AT&T and third-party vendors split revenue, AT&T getting up to 40 percent of billed charges. The settlement requires third parties wanting to bill for ringtones and other content through AT&T Mobility to show they received a customer request for the services and that they made clear the prices and how to unsubscribe. When billing for third parties, AT&T clearly must identify vendors and what services charges are for. AT&T said third-party billing problems are industrywide. It stressed that it had no role in sale of third-party services but simply was a billing agent for the content vendors.

The European Commission should slash mobile termination rates but stay away from network neutrality regulation, WIK- Consult said Thursday. Assessing the best ways to regulate Internet Protocol-based interconnection, WIK said regulators want to ensure that all users benefit from choice, favorable prices and quality of service, that competition distortions are minimized, and that no barriers impede innovation and investment in infrastructure. Network convergence and the shift to user-generated content are altering traffic volumes and patterns, WIK said. IP-based interconnection is done through peering -- ISPs agreeing to exchange traffic solely among respective customers, sometimes at no charge -- and transit, an ISP’s carrying a customer’s traffic to third parties, usually for a fee. Most telephonic interconnection relies on wholesale payment known as calling party’s network pays (CPNP). The U.S., Canada, Singapore, and other nations make dominant operators use CPNP but let lesser players negotiate termination fees subject to interconnection duties and to sides’ paying the same per-minute fees, WIK said. They often set fees at zero, a system called Bill and Keep. The “inevitable” issue is whether to base interconnection of future next-generation networks on the Internet, switched network or another model, WIK said. CPNP is problematic, since it tends to create high wholesale termination rates that boost retail prices, so it shouldn’t be used for IP- based interconnection, it said. And interconnection fees should be far lower, set not by rule but negotiation. A second issue is quality of service in IP-based networks, the report said. Some experts worry at use of different levels of QoS, part of the net neutrality debate. The correct regulatory response isn’t to stop operators from offering such services but to ensure that consumers can make informed decisions and that national regulators use existing tools to address competition problems, it said. Among the report’s recommendations: (1) Impose no interconnection obligation concerning IP data traffic generally, but let regulators intervene if interconnection breaks down. (2) No neutrality regulation is needed now. (3) Independent of the move to next-generation networks, society would be better off if the EC cut mobile-termination rates over three to five years to levels set in advance. (4) If call-termination rates are eliminated or greatly reduced, some operators may try to profit other ways, such as by manipulating prices or quality of the IP interconnection that will have become the basis for voice interconnection. National regulators must ensure that doesn’t happen, the report said.

Verizon asked the Virginia Corporation Commission to reconsider its standard for determining when an exchange has enough competition to justify retail-rate deregulation. The commission, in a Dec. 14 order granting Verizon rate deregulation in several cities but not statewide, set a competition test for deregulation for all incumbents. It requires that 75 percent of customers in an exchange have access to two or more local competitors to the incumbent, and that 50 percent of customers have access to at least one facilities-based wireline competitor. Verizon asked the commission to broaden the rule’s definition of “facilities- based wireline” competitor to include companies that lease unbundled loops from Verizon but otherwise carry calls over their own switches and backbone networks, cable companies that offer digital broadband telecom services, and wireless providers that use their own networks for phone service. It also asked that the commission consider broadband service availability as a proxy for VoIP availability for the 75 percent availability test. Verizon said VoIP providers aren’t state regulated and have no duty to tell the state or Verizon where their services are available.

President Bush said Thursday he is “disappointed” that Congress failed to pass bills immunizing telecom providers for their alleged roles in a post-Sept. 11 warrantless wiretapping program. “The first priority of Congress when it returns in the new year must be to pass a good bill and get it to my desk promptly,” Bush told a press briefing. “They have a duty to give our professionals the tools necessary to protect the American people.”

White House documents don’t make the case for retroactive immunity for telcos from lawsuits that could grow out of the president’s post-Sept. 11 warrantless wiretapping program, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., said at a hearing Wednesday. The Judiciary Committee received the documents this week after a months-long battle with the White House, which had withheld the information citing national security concerns. But Leahy said the material didn’t convince him that companies should be excused from any legal responsibility, even though they had assurances from the White House that the program was legal, Leahy said.

The federal government, filing as an enterprise customer, told regulators in New York and Virginia that Verizon lacks enough competition to justify deregulation, two competitive telecom companies told the FCC Thursday. “Given that the U.S. government, acting as a consumer, has experienced first-hand the failure of market forces to discipline Verizon’s pricing and service quality, it is hard to fathom how the Commission could compound the problem by granting Verizon’s pending forbearance petitions,” Covad and XO Communications said in an ex parte. The letter referred to Verizon petitions to the FCC for forbearance on unbundling duties in six East Coast cities. Attached to the FCC letter were federal government filings in state proceedings reviewing Verizon’s request for pricing flexibility in New York and detariffing of retail services in Virginia. “These filings unequivocally confirm that the Verizon Telephone Companies continue to enjoy significant market power in the residential and enterprise markets and that competition is not sufficient to justify a grant of forbearance” at the federal level, Covad and XO said. Verizon requests for forbearance in Boston, New York, Philadelphia, Pittsburgh, Providence and Virginia Beach, Va., are due for FCC action in December.

SAN FRANCISCO -- CEO Randall Stephenson said AT&T isn’t sure it can make money on the 700 MHz spectrum if it’s under open-access rules. The company is studying the question because it needs to add spectrum even with its $2.5 billion purchase of Aloha Wireless assets in that band, and it’s “the best spectrum that you're going to find for a long time” to acquire, he said Friday at the Web 2.0 Summit.