It is the holiday season and in the spirit of giving, it is once again time to provide our friends at the FCC with our annual Christmas wishes. 2017 will bring a new Commission with a new chairman, new hopes and new proposals. We can only hope that they will respond with a little more enthusiasm for our ideas than the last Commission did (one can dream!).    

So without further adieu, let’s begin!

Put Aside Political Differences – Under the chairmanship of Tom Wheeler the FCC over the last several years has been the most partisan in its long history. It wasn’t only that every important decision was made on the basis of political party, Wheeler also refused to share draft orders with the Republican commissioners and rarely seriously considered their ideas. With his resignation, effective on January 20, 2017, the Commission has a chance to once again compromise on important issues such as net neutrality, ISP privacy and regulations for the business data services (BDS) market. Such compromise is the best way to adopt orders that will outlast changes in the political party of the President.  

Use Economic Theory to Develop Regulations – Too many recent FCC decisions were made to score political points instead of using economics to develop sound regulations. For example, the BDS Order that was about to be released before Trump won the election would have re-imposed price cap regulations on all ILEC Ds1 and DS3 circuits despite evidence from the Commission’s own economic analysis that at least some markets were competitive and intensive regulation was not needed. Such regulatory overkill hurts the economy by costing jobs and delaying the industry move to new technologies. For example, keeping DS1 and DS3 rates artificially low provides incentives for carriers to stay with inferior time division multiplexed (TDM) services rather than moving to more advanced packet services such as Ethernet.

Develop Competition-Based BDS Regulations – The new FCC has a chance to develop regulations for special access and Ethernet that are based on two conclusions from the FCC’s market analysis. First, special access regulation is only needed in certain markets – usually ones that are rural or high cost areas. In those areas, customers may benefit from short-term price controls for DS1 and DS3 special access circuits. More importantly, regulations should encourage customers to move to Ethernet whenever possible. One method would find current “all-or-nothing” special access optional payment plans unlawful (they are currently under an FCC investigation) and allow for an orderly movement without penalty to Ethernet services offered by the ILEC or its competitors. Second, Ethernet price controls are not needed. Competition from ILECs, CLECs and cable companies has made the higher speed data market truly competitive and the Commission should stay away. Finally, the requirement in the Technology Transitions Order that ILECs must provide “reasonably comparable” Ethernet services when discontinuing TDM DS1 and DS3 service in an area should continue. There are many CLECs using ILEC special access circuits as a wholesale piece of the service they provide to their own customers. Such wholesale services must continue to remain available while the industry transitions to packet-based services.   

Congress Should “Fix” Net Neutrality – While the FCC can rewrite the net neutrality rules it would be a multi-year project. The Commission would have to begin yet another rulemaking based on the premise that broadband Internet access service should be reclassified as a Title I telecommunications service. Industry comments would be filed, an order issued and almost certainly appealed to the courts. In the interim, the Commission would likely ignore the net neutrality rules already in place. A quicker and more lasting change to net neutrality would involve a rewrite of the 1996 Telecommunications Act by Congress. New rules to ensure an open Internet would include the elimination of Title II regulations but would keep the current rules of no blocking and no throttling of Internet traffic. Traffic prioritization would be permitted if based on sound economic principles. Most importantly, new services would be permitted to be introduced without receiving prior Commission approval.

The Same Privacy Rules Should Apply to ISPs and Edge Providers – Thankfully, once Title II regulation is eliminated privacy rules for ISPs would once again fall under the jurisdiction of the Federal Trade Commission and would presumably once again be the same for ISPs and edge providers. While we have mixed feelings regarding whether customers should be required to “opt-in” before edge providers or ISPs are permitted to use their web-browsing history to market to them, we believe the same rules must apply for all Internet companies.

Require More Public Information Regarding Technology Transitions Experiments – As we have pointed out before, AT&T is conducting a major technology transitions experiment in Alabama and Florida which will be used by the Commission to ensure consumers and businesses are protected during the transition to an IP-based network world. There are also a bunch of other technology transitions experiments occurring in smaller markets. But does anyone know how these experiments are going? The reports that are required to be filed with the public are filled with blanks since much of the data is deemed confidential. How can wholesale carriers and the public judge whether the transition to packet-switched is working smoothly or whether certain customers such as elderly Americans are losing services or having problems adopting to the new technologies. The Commission’s failure to demand public results for these experiments is egregious and must change.

Require IP Interconnection Agreements to Comply with the Section 251 Rules – We once again plead with the Commission to take the simple step of  requiring ILECs to be bound by the section 251 interconnection rules in the 1996 Act when negotiating IP interconnection agreements with CLECs. The continued failure to do so allows ILECs to use their market power to potentially advantage themselves with unfair traffic exchange rules or prices. Moreover, CLECs have no choice to abide by these rules since they must have interconnection agreements with ILECs to serve their customers. 

For the first time in many years, the 2017 FCC will truly be new and will have a chance to learn from the mistakes made over the last several years. We eagerly await its call and will happily sit down with the new commissioners at their convenience!

While we wait with bated breath for the phone to ring, we want to wish all of you a Happy Holiday and great, safe New Year. Thank you for your support, and we look forward to talking to you in 2017!  

By Andy Regitsky, CCMI