NPRM seeks to address effects of discontinuance of copper-based services on consumers, competition.

As many readers doubtless know (and as we have previously reported), the IP transition is underway: telecom carriers are shifting away from time division multiplex (TDM) technology using traditional copper wires; instead, they are embracing Internet protocol (IP) technology using optical fiber and coaxial cable facilities. This shift will implicate a wide range of regulatory considerations which the FCC is already looking into. It will also affect consumers and competitive telecommunications providers who are used to the TDM/copper wire way of life.

In a Notice of Proposed Rulemaking and Declaratory Order (NPRM/DO), the Commission has requested comments on three particular ways in which the transition will affect consumers and competitive providers.

Back-up Power. The legacy copper network is powered from the telephone company central office, where back-up generators are usually available when commercial power fails. Because consumers don’t need to provide their own electricity to power their landline phones, the phones usually work during a power outage as long as the phone wires on the street haven’t been knocked down. But when phone service is Internet-based and provided by cable or fiber, power does not come from the central office – meaning that, if a household relying on IP/non-copper telephone service loses power, its phones go dead unless some back-up power system is in place in the consumer’s home or office.

Of course, the need for telephone service generally is highest during precisely the kinds of emergencies that cause power loss, so the Commission is looking for ways to assure the continued availability of basic phone service during emergencies. One possibility is technology which will deliver emergency power over fiber from an ethernet hub. Such technology may provide only limited power – enough, say, to support traditional voice and 911 calls but not sophisticated power-hungry activities like streaming video or music – but it would at least  provide basic communication capability. Another possibility would be to require service providers to offer back-up systems with standardized power sources routinely available at retail outlets (think “D” cell alkaline or lithium ion batteries and the like). That approach could enable consumers to handle their own back-up needs (but do you remember to change your smoke detector batteries, and would you remember to change your phone batteries?). Since continuous 911 calling capability is a high priority, the FCC is considering minimum standards that would guarantee that phones would continue to work on backup power in the range of 8 to 24 hours.

Impact of Copper Retirement on Consumers. The shift from TDM/copper to IP/non-copper facilities poses potential problems for consumers over and above the back-up power issue. While new IP-based services provide voice telephony that doesn’t sound much different from what most of us are used to, at least some IP services don’t transmit data that comes from a fax machine or an alarm or a health-monitoring system – which, particularly in that last instance, can pose big problems for persons with disabilities.

Historically, discontinuance of service has been presumed to be permitted, which means that discontinuance can be implemented automatically unless the FCC intervenes in response to a notice filed by the carrier. The Commission is not proposing to change the requirement that the carrier notify the FCC, but it is inclined toward the view that telecom providers should be required to notify their customers as well, giving them notice both of changes to the underlying systems and of the way(s) that those changes may affect the services available to consumers.

“Information” is, of course, one of today’s FCC watchwords (seemingly just behind “broadband” in importance), so the FCC is proposing that carriers be required to notify all of their retail consumers who would be directly affected by contemplated copper retirement. While that may look like a simple conclusion, it entails a host of details that will need to be addressed:

  • What, after all, is “copper retirement”?  If, instead of dismantling copper lines, a carrier just stops repairing them, so that an increasing number of service failures drives consumers to change to IP whether they like it or not – would that be the same thing as discontinuance?
  • Which customers should be entitled to notice (i.e., which ones can be said to be “directly affected”)? Also, the FCC suggests that notices should be required to be sent to public safety agencies and the Department of Defense as well as the FCC itself;
  • What do customers need to be told?;
  • How and when should the notice be communicated? On the question of timing, the NPRM suggests 90-180 days;
  • Should notice be given to consumers about anticipated future network changes before the carrier is ready to implement the changes?

And of course, the FCC wants the notices to be “neutral”’ with no “upselling,” please. Carriers would not only have to provide proper and timely notices but would also have to certify to the FCC that they complied with that requirement.

As a further potential means of reducing any adverse impact of copper retirement, the FCC is also considering ways in which it could promote the sale or auction of existing copper networks. That is, a carrier wishing to retire its existing copper would be incentivized, or possibly even required, to make a good faith effort to sell its copper facilities before abandoning them. The idea is that existing or new competitors might be willing to enter the market by acquiring the to-be-abandoned copper facilities.  (If the FCC tries that approach, watch out for pole attachment fireworks when the attacher suddenly becomes someone that the pole owner never dealt with before.) The Commission hopes through this proceeding to gauge the interest of competitive providers and others in acquiring such facilities in this way.

Protecting Competition Through Wholesale Access. The continued availability of special access and last-mile services for competitors poses another problem. Competitive providers of both telephone and broadband services often have limited physical facilities of their own, so they lease lines on a wholesale basis from major carriers both to link their network hubs and to obtain last-mile drops to consumer locations. The transition to IP could conceivably be used to undermine such competitive providers by leaving them without access to critical facilities. For example, copper retirement could be used as an excuse:

  • to discontinue wholesale offerings that competitors need; or
  • to migrate those offerings from tariffed to non-tariffed status, thus escaping layers of regulation; or
  • to refuse to provide service unless the buyer commits to volume or long-term contracts that may make it difficult for the competitor to improve its network or services in the future.

While the Commission doesn’t want to impose any new wholesale access obligations on incumbent carriers, it likewise wants to avoid any reduction in competition. To that end, the FCC is proposing that, where a legacy service used as a wholesale input by competitive providers would be discontinued, reduced or impaired, the incumbent carrier would have to commit to making its replacement facilities available to provide competitive providers equivalent wholesale access on equivalent rates, terms and conditions.

Declaratory Order. Recognizing that a working definition of “discontinuance, reduction or impairment of service” is fundamental to this proceeding, the Commission has taken the somewhat unusual step of providing a Declaratory Order to bring that definition into focus. Whether it succeeded in doing so is not clear.

At least one carrier apparently suggested that if access to third-party services and devices is not defined by the tariff as a part of the service offering, then a shift by the carrier from copper service to some alternative that doesn’t support such third-party services or devices should not be viewed as discontinuance, reduction or impairment of service.

The Commission takes pains to reject that suggestion. According to the Declaratory Order portion of the NPRM/DO,

the Commission looks beyond the terms of a carrier’s tariff, and instead it applies a functional test that takes into account the totality of the circumstances from the perspective of the relevant community or part of a community, when analyzing whether a service is discontinued, reduced, or impaired under
Section 214.

In the FCC’s view, the determination of what services are being provided to end users requires consideration of “the totality of the circumstances” – sort of like “what think you see is what you are supposed to get.” And those circumstances include the “perspective of the relevant community or part of a community” that uses the services. While the Commission emphasizes that this “does not mean that every prior feature no matter how little-used or old-fashioned, must be maintained in perpetuity”, it offers no clear guidelines for distinguishing (a)“little-used or old-fashioned” features that may be discontinued from (b) others that may not. Nor does it identify how large a “part of a community” must be to warrant consideration. (The Declaratory Order portion of the NPRM/DO drew strong dissents from Commissioners Pai and O’Rielly.)

We could see a significant new layer of regulatory intervention as a result of this rulemaking, but the FCC also wants to give carriers a roadmap as to what steps will lead the agency in the direction of allowing changes more or less routinely. They are looking at these elements: no increase in price per megabit per second of service, wholesale rates not greater than retail rates, no increase in basic service pricing, no reduction in data bandwidth options, no backdoor price increases through miscellaneous charges, and no impairment of service delivery or quality.

We’re going IP for sure. The question is who will get the final word on what the 21st Century network looks like, what services will be offered, and how they will be packaged and priced.

As is becoming more commonplace these days, the FCC has provided for a very short comment period, despite the major significance of the issues under consideration. Comments will be due only 30 days after publication of the NPRM/DO in the Federal Register, with Reply Comments only 30 days later. Watch for an update when the comment deadline is formally set.