Telecommunications carriers are rapidly, and apparently successfully, moving to all Internet Protocol (IP) networks. The latest evidence is a report AT&T just filed with the FCC for the fourth quarter of 2014 reviewing the progress it has made so far in its “technology transitions” trial in Carbon Hill, Alabama and West Delray Beach, Florida. This experiment, sanctioned by the Commission in Docket 13-5, is the first major industry test to determine how the network change would impact actual consumers and businesses, including the wholesale providers serving these areas.

AT&T purposely selected these communities because of their diversity. Carbon Hill is very rural and West Delray Beach has a large number of elderly residents. Thus, the experiment should provide a real world look at how the IP conversion would impact residents and businesses that may be resistant to change.

During the current phase of the experiment, participation by end user and wholesale customers has been voluntary. AT&T stated that, during this phase, it planned to grandfather existing customers, and offer only next generation wireless and wireline IP-based services for new orders. Ultimately, existing customers would also be transitioned to an IP service, but that next phase would not begin until after the Commission evaluated the results of Phase 1 and permitted AT&T to begin the full IP transition.  

The FCC will be encouraged by the report since it appears to demonstrate that, at least for consumers and retail business customers, the transition is moving along smoothly with minimal resistance. The report provided data regarding:

• Service migrations consumers are making in the trail areas;
• How customers are responding to AT&T’s sale and marketing efforts and issues they have encountered in the move to IP;
• Network performance in the trial and control wire center; and,
• Outreach efforts to the community in general and specifically to seniors and persons with disabilities.

As of December 31, 2014, AT&T summarized the transition of targeted Time Division Multipexed (TDM) customers as follows:

In Carbon Hill, Al consumer legacy accounts declined by 14 percent and IP accounts increased by 5 percent;

In West Delray Beach, FL consumer legacy accounts declined by 5 percent and IP accounts increased by 12 percent;

In Carbon Hill, AL retail simple business accounts (defined as businesses with less than seven lines) decreased by 6 percent and IP accounts increased by 50 percent from a very small base;

In West Delray Beach, FL retail simple business accounts decreased by 3 percent and IP accounts increased by 12 percent.

AT&T also claimed that its Network Performance Reports showed that it’s VoIP, mobile and TDM networks all experienced “robust performance.”

Approximately a third of the customers who chose not to migrate to IP services at this time expressed concerns regarding 911calls, compatibility with medical devices, alarms and fax machines. AT&T stated that it would seek to “fix” these concerns.

However, there is one glaring hole in AT&T’s report, the complete lack of data for its wholesale business customers. There is simply no way for the Commission to judge how they are being impacted by the network change. Thus, wholesale carriers may soon find themselves in a severe competitive disadvantage if the FCC deems this trial a success and moves to implement similar trials elsewhere, without any recognition that wholesale carriers may not be doing as well as consumers or retail businesses.

Clearly, the FCC should be concerned about the effects of the transition on wholesale carriers. After all, AT&T has noted that it intends to completely withdraw all TDM-based wholesale services in future phases of its network trials, but has not indicated what if any wholesale services will be offered as IP substitutes. 

Moreover, even while affirming that it would continue to meet its wholesale obligations under Section 251(c) of the Act by providing UNEs through the first phase of the trial, AT&T indicated that in the future its wholesale customers could only purchase bare copper loops and be forced to utilize their own electronics to provide high capacity services to their end user customers.

Most egregiously for wholesale customers, AT&T has stated that for the duration of this trial, interconnection between it and wholesale providers would only occur via commercial agreements. Naturally, these agreements would not be required to comply with the section 251 interconnection pricing rules and would not have to be approved by state commissions or open to the public.

Thus, we have a situation in which the major industry trial, if successful, would undoubtedly be used as the template to transition the industry to IP services, without any analysis of how a major segment of the industry is impacted. It is simply amazing that the FCC has let this occur! While FCC Chairman Wheeler continues his net neutrality victory tour and seems to care only about broadband competition, there may be a lot of consumers and small business customers with fewer competitive choices for plain old telephone service. Don’t they matter too?

By Andy Regitsky, CCMI