Agency addresses spread of digital voice technology

The telephone system formerly relied on the technology called “circuit switching”: by dialing a number, a caller caused the equipment to set up a temporary, private connection with the person being called. This is inherently an analog technology. Now, however, calls are increasingly carried in data packets moving over heavily shared facilities, either the on public Internet or on private networks that operate in much the same way. But the FCC rules are still geared to the old analog circuit-switched system. They are not well suited to handling IP-related innovations like VoIP and Google Voice. Recently we harrumphed that these advances would soon trigger the need for a regulatory overhaul.

Either our harrumphings carried across the Potomac, or else (and more likely) the people at the FCC saw the same facts we did and reached similar conclusions. The FCC has now released a short public notice with the momentous title, “Comment Sought on Transition from Circuit-Switched Network to All-IP Network.” It solicits input on the contents of a possible future Notice of Inquiry. Responses to the NOI in turn would inform a Notice of Proposed Rulemaking. And comments in response to the NPRM would help the FCC to formulate new rules. With three comment cycles planned, and allowing a year or two for each, the rules will take a while. (If you’re inclined to stake out your position early in the process, the deadline for responding to the initial comment invitation is December 21, 2009.)

The FCC reassures us the job can be done. After all, it says, the country came through other transitions successfully. But the examples it offers are less reassuring: the shift from analog to digital cell phones, and from analog TV to digital TV. The first of these was mostly transparent to consumers. Most of us didn’t know when our cell phones went digital, nor did we care. The other example, the DTV transition, was the just opposite: a years-long, sometimes chaotic process that many viewers found to be confusing and disruptive.

Regulation played very different parts in these two events. The cell phone transition was managed by a small number of service providers and handset companies with little involvement from the FCC. In fact, the cell phone rules barely mention the distinction between analog vs. digital service. The DTV transition, in contrast, was the FCC’s show from the start. It could not have happened any other way. Broadcasters saw no point in launching digital broadcasts until viewers had digital TVs; but no one would buy digital TVs until there were digital broadcasts to watch. It took the FCC to cut the Gordian knot, first by requiring digital broadcasting and later on by limiting the sale of analog-only TVs.

The shift of the telephone system from circuit-switching to IP will not conform to either of these paradigms. The players here are far more numerous than in the cell phone analog-to-digital shift, and far less coordinated. But neither are those players waiting for the FCC to take the lead, as it did for digital TV. Different parts of the phone system have begun making the IP shift in piecemeal fashion. The FCC will step in to regulate a process that is already well underway.

The title of the public notice contemplates transition to an “all-IP network.” It will be many years, if ever, before the network is “all-IP.” Until then, the FCC will have to manage a phone system that is partly circuit-switched and partly IP. Today the center of the network, such as long-distance connections, is increasingly IP-based. But most people at home still get their service as they did a century ago: over a circuit-switched copper pair. There are exceptions. Some households rely only on cell phones; some use VoIP services like Vonage or Skype; and those who get phone service through the cable company also have VoIP, perhaps without knowing it. The numbers of these groups will grow. But especially in rural areas, where technology options arrive late, the old-fashioned switched copper loop will continue to be the mainstay.

Presently the FCC regulates the switched-circuit parts of the network and leaves the IP parts alone. (It subjects some VoIP to limited requirements.) As the switched-circuit portion shrinks, that separation will come to make less sense. But the way forward is not clear. On the one hand, to newly regulate IP services would undo 30-plus years of successful policy. On the other, abrupt deregulation of switched-circuit operations will not work, either. The parts of the phone system that will keep switched-circuit technology the longest are the most rural and least profitable. Without continued regulation, a phone company would have every incentive to walk away from just those users who have no other options.

We hope the public notice brings lots of good advice. The FCC is going to need it.