Commission seeks data for critical policy dialogue; coming changes may particularly affect smaller carriers – and their customers.

Major changes are coming to the telephone system that provides the interconnected communications system on which American society has long depended. For more than 125 years that system has been based on a circuit-switched, mostly copper-wire-based public switched network (PSTN) – nowadays sometimes called a “Time Division Multiplex (TDM)” network. But networks based on Internet Protocol (IP) technology have begun to replace the PSTN. The FCC has now expressly acknowledged that the “the global multimedia communications infrastructure of the future” will consist of all-IP networks very different from the circuit-switched technology we have been used to since Alexander Graham Bell.

And with that acknowledgement, the FCC has now started to take steps to identify and assess the effects that the fundamental technological overhaul of our nationwide phone system are likely to have on phone companies, consumers, and the FCC’s own ability to achieve its statutory responsibilities.

To that end, the FCC has invited proposals for “service-based” experiments designed to illuminate and inform the transition to IP-based service. Reflecting the seriousness and urgency of its purpose, the FCC has set an unusually short deadline for the submission of the initial round of experiment proposals: they are due by February 20, 2014, a mere three weeks after the FCC’s call for those proposals. Potential experiment proponents will need to get moving quickly, as will parties wishing to comment on any proposals that are ultimately filed: comments are due by March 21.

The transition from a copper-wire, TDM system to IP-based alternatives has been building momentum since voice-over-Internet-protocol (VoIP) services commenced over a decade ago. As carriers large and small replace their existing plant, seeking cost and service efficiencies in the process, the prospect of an all-IP network has come into view, so much so that large carriers began calling for planning for that transition over the last two years.

Planning is essential because, while the transition to an all-IP network promises  significant benefits, it will entail complications affecting a wide range of regulatory and practical considerations. The costs and structure of interconnection and call completion, intercarrier compensation, resale of services to competitors, the allocation and use of telephone numbers – all these areas, and more, will feel the effects of an IP transition. Moreover, the transition may affect the reliability, availability, quality and cost of services offered to consumers.

Experimentation, and careful analysis of the results of the experimentation, will be important because the transition’s effects could likely vary between, for example, large carriers on the one hand and smaller carriers and large end-users, on the other. To that end, the FCC’s invitation is as wide as possible: all elements of the telecom ecosystem can participate if they wish – although participation is purely voluntary – and even those who choose not to participate should be alert to the results generated by others’ experiments.

What types of experiments does the FCC have in mind? “Service-based” experiments, described by the FCC as “experiments in which incumbent providers seek to substitute new communications technologies for the TDM-based services over copper lines that they currently are providing to customers, with an eye toward discontinuing those legacy services….”

The FCC is looking for information across from as many different sources as possible. Non-incumbents may propose experiments of new and innovative services as well. The universe of possible experiment proponents includes “all types of providers of network services”: ILECs, CLECs, cable operators, fixed and mobile wireless providers, providers of carrier Ethernet exchange services, utilities, municipalities, and 911 service providers.

The FCC is also looking for input about diverse technologies (twisted copper pair, co-axial cable, fiber, wireless), population densities, and geography. Proposals may be made by multiple entities working together.

All proposals must provide detailed information about the experiments’ design. The goal is to allow meaningful public comment and Commission evaluation of the proposed experiment. In particular, proposals must describe:

  • The purpose and proposed metrics for measuring success;
  • The experimental scope or arena (geography, product, or service offering);
  • The technical parameters, including description of any physical or other network changes and how they will: (a) affect customers and other providers and (b) affect product or service offerings;
  • The timelines for experiment, including timelines for the proposed network changes, the timing of any impacts on customers, and when the experiment is likely to be complete; and
  • What temporary regulatory relief or other Commission action would be required to conduct the proposed experiment.

The FCC has also established a framework of conditions and presumptions governing the experiments. The goal of these is to assure that all experiments will be consistent with the “four enduring values” associated with regulation of the telephone network: public safety, universal service, competition, and consumer protection. Among the FCC-imposed conditions and presumptions:

Public Safety. Proposed experiments must preserve: 911/E911 service; TDM-based service to national security, police and emergency service agencies; adequate power backup for non-copper based services; and protection against cyber security threats. Additionally, the Commission will “presume” that current levels of network security will be maintained, and that wireless carriers will maintain the ability to provide public emergency alerts and prioritize government agency transmissions during responses to emergencies.

Universal Access. To preserve universal access to the telephone network, experiments must not jeopardize access for persons with disabilities or other vulnerable classes, such as low-income populations and residents of Tribal lands. The Commission will presume that applicants “will continue to be subject to all existing universal service rules and policies regarding both support and contribution obligations,” that there will be no reduction in the level of Internet access to affected populations, and that there will be no reduction in existing quality of service.

Competition. To preserve competition, experiments must provide that potentially affected CLEC wholesale customers may, but will not be required to, participate. However, subsequent phases of a successful experiment might include withdrawal of wholesale services. Additionally, experiments must assure the maintenance of the status quo in provision of interconnection arrangements to existing and new customers. The Commission will also “presume” that applicants will maintain the status quo regarding ICC payment and recovery mechanisms in experiments.

Consumer Protection. To protect consumers, experiments must comply with existing requirements to protect consumer privacy, including CPNI, Truth-in-Billing, “slamming” and “cramming” rules. Local number portability must be maintained and the reliability of call routing and completion must be preserved.

Clear and timely notice of the experiment must be given to affected customers, who must be afforded a simple means to give the carrier feedback regarding the experiment.

Experiment proposals must disclose what data will be collected to evaluate the experiment, as well as the nature of a “control group” of consumers to evaluate against the “experimental group.” The data collected through the experiments will not only have to filed with the FCC but will also have to be made public so that it can be evaluated by one and all. Note, though, that the submission and publication of data must still comply with all applicable privacy laws and regulations. While the FCC specifically mentions CPNI rules in this context, carriers should also be mindful of other potentially applicable privacy considerations (e.g., the Electronic Communications Privacy Act, customer privacy requirements mandated for cable operators under 47 U.S.C. Section 551, and the current proceeding looking at whether “anonymization” of customer data fulfills CPNI requirements).

The Commission is clearly determined to get the experiment process up and running as quickly as possible. As noted above, the initial deadlines call for experiment proposals to be filed by February 20, comments on those proposals by March 21, and replies by March 31. The FCC’s target is to reach decisions on some if not all proposals by early June.

The FCC acknowledges that this ambitious schedule might prohibit some parties from preparing their proposals in time. No worries. The FCC “encourages” would-be proponents in that position to go ahead and file late if necessary – although proposals will be accepted only until the first anniversary of the date of the approval of the initial proposals.

The goal at this stage is to obtain data to be used by the FCC in addressing the complex legal and policy questions raised by nationwide transition to an all-IP network. That is, the experimental process is just a first step toward resolving those questions; their ultimate resolution will eventually be addressed in a separate proceeding. It will be important for all potentially affected parties – including smaller carriers, competitors and consumers – to be involved throughout all phases of what promises to be an extensive process in order to assure a result that works for all.

Such involvement by all concerned will ideally permit a thorough and useful examination of the likely across-the-board impact of the various scenarios that surface through the experimental process. For example, AT&T has proposed that post-IP transition, interconnection between carriers should occur in only a few places in the country. But that could impose additional costs on smaller carriers who would have to pay larger carriers to transport their traffic to the few nationwide IP interconnection points. Such additional costs could fundamentally alter the business prospects for smaller carriers, and ultimately could make it far more expensive to place a call from rural America.

Thus, while only limited experiments are being proposed at this point, it will be important for all parties to review and critique proposals that could ultimately impose significant additional costs or other burdens, particularly if those costs and burdens might undercut any of the “four enduring values”.

While the initial round of proposals will be for experiments that do not discontinue TDM-based legacy services, the FCC has emphasized that “[a]fter successful initiation of an experiment, the Commission is prepared to consider additional requests to withdraw the offering of legacy services, including the withdrawal of legacy services to all customers within the geographic location of a service-based experiment under Section 214.” Such requests for subsequent discontinuance of legacy services will be addressed quickly, i.e., no more than three months after public notice of such a request. In other words, experiments could lead to a much quicker complete transition in particular areas than some parties expect.

Parties likely to be affected by the IP transition – including smaller carriers – should seriously consider proposing their own experiments. Active engagement in the IP transition decision-making process through IP trials and submission of data may lead to increased impact at the end of the day. For example, if a large number of rural LECs were to form a group to establish a regional IP point of interconnection and file a joint IP trial proposal at the FCC, the resulting data could be persuasive – and the FCC might conclude that that IP interconnection point should be made permanent.

The experiments proposed by the Commission will likely have a major impact on the timing and nature of the transition to an all-IP network. Carriers large and small, and their customers, all have a lot at stake in this proceeding. We will keep you informed as this matter progresses.