FCC VoIP Ruling Bound to Disappoint Someone

Agency must decide whether to carry over any vestige of current rules into an all-IP realm, and the telecom players don't agree.

November 18, 2013

4 Min Read
FCC VoIP Ruling Bound to Disappoint Someone

Tom Wheeler is showing willingness to wade right into things as the new FCC chair, but there's one pot he doesn't have to stir. The telecom industry is already in hot debate over the Federal Communications Commission (FCC) 's plans to consider changing how voice services should be regulated in the IP era, an action that could have far reaching impact.

The discussion is part of the broader debate over the IP transition and the ongoing role of regulation. Not surprisingly, incumbents are arguing for less regulation in the new all-IP world, while competitors say they still need some rules and requirements to ensure they still have access to customers and the right to interconnect to the "new" public network.

Big division
On one side of the argument are some over-the-top VoIP providers and incumbents, notably AT&T Inc. (NYSE: T), who are arguing that FCC should continue treating VoIP as it has since the days when Michael Powell chaired the commission, and deemed this new-fangled way of delivering voice to be an information service, not needing regulation, as opposed to a Title II voice service. On the other side are other incumbents, such as rural telcos, and competitive exchange carriers (CLECs), who say AT&T, Verizon Communications Inc. (NYSE: VZ), and others are looking for a way around rules that require interconnection for competitive reasons, as well as other regulation.

The rural carriers, led by the NTCA - The Rural Broadband Association , want the FCC to make sure they continue to be reimbursed for carrying VoIP traffic on their networks, as they are today for terminating TDM voice calls.

Mixed into this debate is an FCC trial, being conducted with Vonage Holdings Corp. (NYSE: VG), which would give OTT VoIP providers access to phone numbers, without being registered as a CLEC.

Taken as a whole, the FCC ruling on VoIP has the potential to reshape the competitive services landscape, and set a future course for the FCC as a regulator of Internet-based services. One concern for the anti-regulatory folks is that the current FCC, controlled by Democrats, is more likely to try to carve out a regulatory position for the commission going forward than previous commissions. But any attempt to create new powers will immediately be challenged in court, and take some time to be put into effect.

If the FCC requires the same kinds of interconnection required now, it will be bringing TDM inefficiencies to the IP world, argues AT&T, which first filed a petition with the FCC a year ago, asking that the agency review how regulations should change in the move away from TDM and toward all-IP networks.

AT&T has 5,000 different interconnection agreements in the TDM world, Bob Quinn, SVP, Federal Regulatory, said at the TIA Future of the Network Conference in October, and under existing voice rules, competitors can require AT&T to provide interconnection in any LATA, or local access and transport area, a designation that doesn't exist in the IP world.

Those rules don't apply to wireless carriers, to cable companies or to VoIP providers, Quinn argued.

CLECs cry foul
For their part, CLECs point out that most of them grew up in the all-IP world, or got there well ahead of their incumbent telco counterparts. Instead of looking for TDM-era regulations, they want a "backstop" against the continuing market power of big incumbents such as AT&T and Verizon, to keep from being frozen out of the markets to which they currently have access.

Two CLEC executives -- Kristie Ince, VP of regulatory affairs for tw telecom inc. (Nasdaq: TWTC), and Lisa Youngers, VP of federal affairs for XO Communications Inc. , -- engaged in the same debate with Quinn at the TIA conference, and view AT&T and Verizon as companies who still wield considerable market power. They want the FCC to require good-faith negotiations over interconnection in the IP world and not a regulatory clean slate.

The problem with the "backstop" approach, said David Young, VP of public policy at Verizon, is that any retention of old rules also involves 50 different state regulators, since they can control voice services, and that will impede moving to IP efficiencies.

What AT&T and Verizon are pushing for are trials of an all-IP voice network, and that may be where the FCC lands to try to resolve the dispute. The trials would implement an all-IP solution without traditional voice regulations.

But whichever way this one goes, a big part of the telecom industry is likely to be unhappy.

— Carol Wilson, Editor-at-Large, Light Reading

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