AT&T Defends Wire Center Trials, Argues Against IP-to-IP Interconnection Obligations

AT&T first addressed what they said their request is not. In the chosen wire centers, CLECs would keep the last-mile access rights they have now, with access to the same copper loops they currently lease as unbundled network elements subject to the FCC’s copper-retirement rules, AT&T said. CLECs can then purchase ethernet and other packetized telecom services from ILECs or other competitors, it said. “The potential harm to CLECs is vanishingly small, particularly given the exceedingly narrow geographic scope of these trials.” Preemption of state obligations is not necessary to conduct the proposed trials, AT&T said, saying it’s “confident that carriers and the Commission will be able to identify test wire centers in states that have already eliminated legacy service obligations or that agree to do so for purposes of the trials."

But eventually, in order to complete the IP transition, the commission will need to address issues of wholesale rights and IP interconnection, AT&T said. At that point, the FCC should eliminate “unnecessary and counterproductive wholesale access rights,” and refrain from returning to “anachronistic, monopoly-era regulation,” it said. Regarding IP interconnection, VoIP arrangements will likely arise as efficiently as arrangements have arisen to handle general IP traffic over the Internet, AT&T said. “No regulator ensures that one ISP will interconnect with another to exchange their respective customers’ Skype calls, but those calls still go through,” AT&T said. “By the logic of today’s pro-regulation commenters, that should not be happening.” The commission should “at a minimum” give the industry a “wide berth to negotiate such interconnection arrangements before concluding that a regulatory solution is necessary,” it said. “Even the prospect of regulatory intervention would thwart efficient negotiations by encouraging parties to dig in their heels in the hope of winning an artificial regulatory advantage."

AT&T is clear in its reply comments that neither states nor the FCC should have any authority over IP-enabled services, said Free Press Research Director Derek Turner. “AT&T may have an incentive to seem more modest -- now that its total deregulation plans have been unmasked -- but the import of their plan is clear,” Turner told us. “No competitors will have any of the rights granted to them under the law, and no federal or state agency with the power to protect consumers."

But an all-IP environment will differ from the TDM environment in “critical respects,” undermining any traditional rationale for ILEC-centric interconnection obligations, AT&T said in its comments. The “central preoccupation” of public switched telephone network regulation was ensuring physical-layer interconnection, but in the emerging all-IP environment, such concerns are unfounded because interconnection will involve the exchange of traffic over “very wide regional, national, or global areas,” AT&T said. Smaller IP networks can interconnect as easily as larger ones because larger networks compete for smaller networks’ transit business, it said.

Nor is there a “terminating access monopoly” in an unregulated IP environment, AT&T said. Commenters who push for IP interconnection requirements argue that ILECs have a monopoly over access to “single-homed end users,” but the terminating access monopoly concept is “misplaced” in the IP context, AT&T said. The commission has never found such a monopoly in the absence of Title II interconnection and compensation obligations: “If the ’terminating monopoly’ rhetoric of the pro-regulation advocates were correct, the Internet would be one giant market failure because broadband ISPs, which control the last-mile connections to their respective subscribers, would be extorting supracompetitive fees from all interconnecting IP networks, including Tier 1 backbones,” AT&T said. “In fact, the Internet has been an exemplar of economic efficiency, and the money often flows in the opposite direction, as broadband ISPs pay Tier 1 backbones for access to Internet content."

Competitive providers disagreed. ILEC market power over last-mile access facilities will not decrease as networks evolve to IP-based, said Granite Telecommunications (http://bit.ly/XAlAKI). ILECs will continue to have market power over “bottleneck last mile connections,” and CLECs will need “reasonably priced wholesale last mile access in order to preserve the benefits of competition, particularly for business customers,” it said. Granite called for the commission to update its last mile polices to be technology neutral, and to deny AT&T’s request for trials. “The trials will not provide an accurate measure of how AT&T and other ILECs would behave if the deregulation AT&T requests is granted."

Section 251 and 252 of the Communications Act govern interconnection, regardless of technology used, the American Cable Association said. ACA opposed the idea of wire center trials “with no regulations,” and the prospect of limiting voice traffic exchange for IP-based services to best efforts, thereby threatening voice reliability. Any trial runs should be conditioned on the requirement that ILECs are subject to the interconnection requirements in Section 251 and 252, ACA said. Without recourse to those sections, managed VoIP providers would face “unique competitive obstacles,” ACA said. Unlike over-the-top VoIP, managed VoIP customers “expect and require a high-quality service level for each call,” and providers must “minimize the number of interconnection routing points to minimize degradation,” ACA said. Without Sections 251 and 252, “ILECs could refuse to interconnect on reasonable terms with managed VoIP providers, effectively forcing them to increase the number of intermediate exchanges in their routing and degrade the quality of their voice services by routing through two or more intermediate carriers."

AT&T challenged CLEC arguments that the commission can regulate IP-to-IP interconnection under Title II because interconnection facilities don’t have an information service component, even if the retail services generating the exchanged traffic are information services. “The logical consequences of that claim are breathtaking in their scope: if the claim were true, it would justify Title II regulation of all Internet backbone peering and transit, a step that the Commission has never seriously contemplated,” AT&T said.

"AT&T’s request is still far too nebulous to constitute an actual, defined experiment,” said Harold Feld, senior vice president of Public Knowledge. Safeguards to protect the actual subscribers need to be explicitly set out, he said. Although some, like the National Association of State Utility Consumer Advocates, have argued that AT&T’s position is a “moving target” that has substantially shifted from what was originally asked (CD Feb 26 p7), Feld doesn’t think AT&T has walked back its ask, “because its initial ask was clearly not sufficiently detailed,” he said. “I suppose you could look at it as a triangulation, with AT&T making a broad general request initially and then seeing what objections gained the most traction. But I prefer to see this as a process where AT&T is going to refine its proposed experiment with increasing specificity until everyone can be satisfied that the proposed test: a) will yield real and useful data, and b) the proposed test has suitable safeguards to protect consumers."

"The goal of the petition -- the only reason for filing the petition -- is to advance the notion that these services are not regulated,” said NARUC General Counsel Brad Ramsay. “We're substituting services that are not regulated for services that are.” Ramsay told us he’s still trying to figure out “why suddenly we need a technology trial.” Every place AT&T has deployed U-Verse is a potential place where they could gather empirical data on the IP transition, he said. “If AT&T were remotely serious here, they'd be petitioning for a declaratory ruling” to classify managed VoIP as a jurisdictionally-mixed information service, he said. Implementation of these trials “will give AT&T and Verizon the ability to argue that these are information services,” he said. “They'll say, ‘Why else would these trials go forward?'”

AT&T’s reply comments failed to “tackle key issues” raised by commenters on AT&T’s petition, said Regina Costa, interim chair of NASUCA’s telecommunications committee. AT&T characterized reactions to its petition “as if it were a kind of Rorschach test,” with commenters reading “shadowy threats into AT&T’s otherwise straightforward proposal.” But NASUCA “didn’t read shadowy threats into AT&T’s proposal,” Costa told us. “There was no need to.” AT&T has been “very forthright in spelling out its goal” of preempting state obligations, she said. AT&T’s stated intention of offering the trials in states where there are no regulations or carrier of last resort obligations “means using these customers as guinea pigs,” Costa said. “They want to be able to go into a state like California, or other states that have deregulated VoIP, and by fiat force customers onto IP networks for which there is no regulatory protection. How and why should the FCC permit that prior to tackling the fundamental policy issues that parties have addressed at length?”