National Broadband Plan Architect Supports AT&T’s Wire Center Trials
The chief architect of the National Broadband Plan wants the FCC to grant AT&T’s deregulatory test bed proposal as soon as possible. “If a picture is worth a thousand words, an experiment is worth a thousand pleadings,” said Blair Levin, Gig. U executive director and former director of the broadband plan at the FCC. The FCC is considering AT&T’s controversial proposal to run deregulatory “experiments” in various wire centers to gauge the effects of eliminating ILEC obligations (CD Jan 30 p2). AT&T Senior Vice President Jim Cicconi said it’s “vital that the FCC, for its own future relevance, tackle this -- tackle it today -- and reassess the basis on which it regulates."
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"The sooner they start that experimentation, the sooner the FCC will have real data,” Levin told a “Georgetown on the Hill” event Wednesday. It’s unlikely to cause any harm; AT&T has “all the motive in the world to make sure these experiments work well,” he said. The FCC should also open a single, “holistic, comprehensive review,” and set a date certain by which ILECs will no longer be required to invest “in an infrastructure we know will be stranded,” he said. “The transition to IP is inevitable."
The pace of change has become so obvious that the FCC needs to step back and examine “the core underpinnings of regulation itself,” Cicconi said. AT&T spends an “unfortunate” percentage of its money on old architecture that FCC rules don’t let it turn off without permission, he said, even though those regulations weren’t designed for an IP world. The more the FCC tries to preserve its authority by taking legacy rules and applying them to the modern marketplace, “the more obvious it will become to everybody that this is inappropriate and inadequate,” he said. Cicconi characterized his company’s filing as a challenge to rethink what regulation should do: protect consumers by identifying and dealing with market failures as they happen.
"The FCC refuses to recognize its own data” and what every consumer knows to be true, Cicconi said: There is competition throughout the wireless and wireline industries. “They have utterly refused to recognize that wireless substitution is occurring in America,” he said, citing roughly a third of customers who get their phone service from cable and VoIP, and a third who have cut the cord entirely. “The more the FCC persists in denying the realities of these markets, the more it’s going to put its own credibility and future role at stake."
Many money managers on Wall Street don’t have a good grasp of the IP transition, said Jennifer Fritzsche, managing director at Wells Fargo Securities. “When you talk about things like Title II [and] net neutrality, their faces just get blank,” she said. “They want to know if AT&T is going to hit a 41 percent or a 40.5 percent wireless margin next quarter.” That said, equity investors were optimistic about AT&T’s “Project Velocity IP” announcement of $14 billion to be invested in LTE and U-verse by the end of 2014, she said (CD Nov 8 p11). “There was a general belief on the wireline side that AT&T had really underinvested for a long time,” Fritzsche said. “And some would argue that they're kind of playing catch-up to what Verizon has already done with their FiOS push.” Fritzsche said there are definitely opportunities for growth in the wireless side, with tiered pricing, but the wireline side is trickier. The more regulated parts of the telecom sector are areas that have the slowest growth, she said.
A quick IP transition will “enhance competition for millions” because AT&T has the money to deploy U-verse where people currently only have cable as an option, Cicconi said. But for that to be economically viable, AT&T needs to be able to turn off the old technology, he said. Otherwise, the telco, competing against established players in cable area, would be “more heavily regulated than them,” Cicconi said. “It makes no sense.”