As we move into 2014 and look back at last year, 2013 will be seen as the opening skirmish in what will surely be a protracted and bitter battle over the rules and regulations that will govern the phasing out and eventually elimination of the industry’s existing Time Division Multiplexed (TDM) networks and the move to networks based on Internet Protocol (IP) technology.

Just think about the multi-year legal battles we have experienced over the last 18 years since the 1996 Telecommunications Act became law.  The industry has battled over TDM interconnection rules, unbundled network element requirements, special access pricing flexibility, inter-carrier compensation, and of course, universal service.  All of these issues are worth billions of dollars to the carriers involved, but they are fights over a network that is facing extinction.  Imagine the legal and economic resources that will be thrown at developing favorable rules and regulations for the next generation IP network.  It is staggering to think about!  

The industry’s positions on the IP transition are firmly staked out.  Large ILECs such as AT&T want a date certain elimination of the existing TDM networks with only IP level interconnection permitted.  All interconnection prices, terms and conditions would be developed through carrier-to-carrier negotiations without regard to the 1996 Telecom Act section 251 requirements.  Specifically, AT&T requested the Commission to establish a sunset date for TDM services, classify Internet Protocol (IP) services as information services subject to minimal regulation, modify its rules to permit ILECs to easily discontinue services or modify their networks, and test its proposal in sample wire centers.

Pushing the Commission to move on this issue, in 2012 AT&T filed a petition requesting the Commission to begin IP market trails.  That petition was the geneses of Docket 13-5, the current IP transition proceeding.

On October 10, 2013, AT&T followed up by sending letters to special access customers stating that beginning November 9, 2013 it would no longer offer term discounts of more than three years on DS1, DS3 analog private line and DS0 special access services.  AT&T stated that it would eliminate these long-term discounts as part of its announced phase-out of its TDM network.  This tariff proposal was first delayed and then suspended for five months by the FCC, while it conducts an investigation into the legality of the proposal.

Opposing the large ILECs are the smaller CLECs led by CompTel.   The association asserts that the Commission could speed the IP transition by confirming that IP interconnection for voice services is covered by sections 251 and 252 of the 1996 Act.  IP Interconnection negotiations between ILECs and CLECs would then be required to be in good faith, would counterbalance the unequal negotiating power between the parties and prevent discrimination through public disclosure and opt-in (since all section 252 interconnection agreements must be approved by the appropriate state commission).

CompTel is also concerned that if negotiations for IP interconnection are governed only by the commercial market, ILECs would be free to impose unilateral charges on CLECs for managed voice traffic exchanged in an IP format.  However, if IP interconnection was covered by the Act, then reciprocal compensation would apply (section 251 (b)), and any imposed charges would be governed by the ongoing transition to bill-and-keep as part of the Commission’s Inter-Carrier Compensation “Transformation Order” (Docket 10-90).

The Commission intends to move quickly on the IP transition.  At the December 12, 2013 Commission meeting, the Technology Transitions Policy Task Force presented a status update with the expectation that the January meeting will include consideration of an Order for immediate action.   The Task Force stated that the Order will:

 On an invite and on a rolling basis, establish service-based experiments with short timelines for submission;

 Establish criteria for experiments that focus on the impact on the consumers;

 Create a speedy process for public comment and Commission evaluation;

 Recommend Commission actions to support targeted experiments and research;

 Describe structured observations and data collection initiatives;

 Establish a timeline for the adoption of a managerial framework to resolve the important legal/ policy questions raised by the technology transitions.

FCC Chairman Tom Wheeler had previously stated that this January Order will also include Commission consideration of legal, policy, and technical issues that would not neatly fit within the experiments, with a game plan for efficiently managing the various adjudications and rulemakings that, together, will constitute our IP transition agenda.  The Order will also set forth the best process that the Commission can initiate so that, in parallel, it may decide the legal and policy questions raised by this network revolution.

This highly-anticipated IP Transition Order should be released later this month, with many industry comments sure to follow.  This will certainly be THE proceeding to follow in 2014.

By Andrew Regitsky, President, Regitsky & Associates