Large Carriers Oppose FCC Involvement in IP-to-IP Interconnection Framework

Larger players generally opposed a government-mandated transition to IP-to-IP interconnections, characterizing it as unnecessary, harmful, and premature. AT&T said such regulation would “create massive regulatory uncertainty” and “turn back the clock on technological convergence.” The commission “should follow one overriding objective in this proceeding: to confine the uncertainties and inefficiencies of intercarrier compensation regulation to the PSTN and keep them from infecting the Internet,” AT&T said (http://xrl.us/bmv9px). “As the PSTN sunsets, so should this singularly dysfunctional field of regulatory controversy."

The Internet has flourished due to private agreements allowing IP-packets to travel between different networks, and “there is no plausible basis for concern that traffic exchanges between IP networks will be any less efficient in the future,” AT&T said. In any case, IP services are Title I information services and the FCC lacks authority to regulate interconnection arrangements between IP networks, the company said.

Verizon said the commission has already determined that all carriers must accept VoIP traffic, and negotiations are underway toward direct exchange of additional traffic. Even innocuous regulation could disrupt the transition and harm consumers, the company said (http://xrl.us/bmv9pa). “Regulatory history amply demonstrates that, especially in industries marked by rapid technological change, rules based on static assumptions about technology and markets quickly become obsolete -- and worse, can lead to unintended negative consequences, including stifling investment and innovation,” Verizon said (http://xrl.us/bmv9pa). “Guessing wrong about the ‘right’ IP interconnection requirements at this early stage in the industry’s transition to IP could profoundly retard the industry’s future development and slow the speed at which consumers receive the next-generation technologies’ benefits."

Comcast said regulating IP-to-IP traffic could “bleed into regulation of the Internet backbone itself” and “risk serious distortions of that vibrant ecosystem” (http://xrl.us/bmv9pp). More importantly, it said no one yet knows what the optimal structure and scope of the voice-IP exchange agreements should be. “Regulation of IP-to-IP voice interconnection is at minimum premature, and it could prove counterproductive,” Comcast said. “The Commission should encourage and facilitate the negotiation of such commercial solutions, but more intrusive regulatory intervention now could interfere with this dynamism, and could risk creating unforeseen arbitrage opportunities and costly inefficiencies that are not yet understood or predictable."

Carriers such as T-Mobile encouraged the commission to set a date certain for an official PSTN sunset. The PSTN should transition “within a reasonable timeframe” to a “fair and efficient IP infrastructure,” T-Mobile said. It suggested the commission adopt its “Internet-Modeled Network” proposal that proposes a regional IP points of interconnection regime based on “efficient Internet engineering principles” and “unconstrained by the wireline architecture that determined the development” of the PSTN (http://xrl.us/bmv9pc). “For the long term, the Commission can most productively set a timetable for a structural transition from the current legacy interconnection regime, characterized by thousands of expensive, inefficient time-division multiplexing POIs offering LECs unlimited opportunities to extract subsidies from their competitors, to a system of a limited number of regional IP POIs serving as common network edges, along the lines of the Internet backbone network,” T-Mobile said.

Smaller and purely wireless carriers generally supported the FCC’s authority as a way to ensure larger carriers can’t use their dominance to abuse the system in their favor. MetroPCS said it supports the agency’s statutory authority to regulate IP-to-IP interconnection as a telecom service under the Communications Act, and disagrees with proposals that leave such interconnection to unregulated commercial agreements. “Leaving such an important -- and necessary -- aspect of the telecommunications industry to commercial agreements would not be in the public interest,” MetroPCS said (http://xrl.us/bmv9pg). “Frequently, carriers such as MetroPCS must seek to interconnect from other carriers who also are direct wireless competitors. Surely competitors would seek to take advantage of this framework and deny IP-to-IP interconnection on reasonable rates, terms, and conditions to raise general market costs. This would not be the first instance where carriers attempt to take advantage of the system in order to give themselves a competitive edge."

Leap Wireless also encouraged the commission to assert authority over IP interconnection. They said the agency should develop “rules that provide all telecommunication carriers with the right to request and receive IP interconnection, establish a series of regional POIs for the exchange of IP-voice traffic, and require originating carriers to bear the costs to deliver IP-voice traffic to these regional POIs” (http://xrl.us/bmv9pi). “A targeted set of default rules is needed to ensure that carriers with greater negotiating power do not impose unjust and unreasonable requirements on or discriminate against carriers with lesser negotiating power,” they said. “The Commission cannot leave IP interconnection largely unregulated; such a laissez faire approach would only delay IP interconnection for IP-voice traffic indefinitely."

Cbeyond, EarthLink, Integra Telecom and tw telecom filed joint comments arguing that the commission shouldn’t adopt detailed pricing or technical rules governing IP-to-IP interconnection, but instead “should focus on clarifying that LECs have an enforceable statutory duty to provide IP-to-IP interconnection” (http://xrl.us/bmv9pr). Because facilities-based VoIP services qualify as telecom services, “the Commission should require incumbent LECs to provide IP interconnection arrangements at cost-based rates,” consistent with the pricing standards of Section 252(d)(1), they said. State commissions could arbitrate any disputes over whether rates are cost-based, they said.