McDowell Supports AT&T’s Proposed Wire Center Trials, Urges Regulatory Caution
Regulators need to be patient as the burgeoning real-time IP-to-IP communication markets sort themselves out, FCC commissioners and telco executives said Thursday at the Free State Foundation conference. Outgoing Commissioner Robert McDowell threw his support behind AT&T’s proposed deregulatory trials in some wire centers, and cautioned against well-intentioned regulations that stop innovation in its tracks. Pai denounced the Open Internet order, questioning the commission’s legal authority to act.
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Pai said he’s not looking for any particular results out of the wire center trials; he just wants to see “what goes right and what goes wrong” when telcos migrate customers to IP platforms. Will it proceed efficiently or will there be service disruptions? “We need to figure these things out,” Pai said, stressing he has a “completely open mind” and no preconceived notions of what regulations to keep and which to jettison. “I don’t have any specific threshold or markers in mind that are going to yield a success or a failure."
"The idea of test beds could be very useful,” especially in a controlled environment premised on consumer protection, said McDowell. “Let’s get on with that,” he said. “I don’t understand the vehement opposition.” Some of the IP transition issues facing the industry have been lurking for years, he said, and the market has reached a point where it’s really time to rethink things. “The commission has a lot of statutory authority to actually act here,” he said. “Congress needs to step up” and attempt a “fundamental rewrite” of the Communications Act “as soon as possible."
It’s important for regulators to “be patient, and wait to see what markets can do,” McDowell said. During the debate over using Unbundled Network Element-Platforms to bring competition to residential voice service (CD Jan 15/03 p1), the “best and the brightest” didn’t foresee the rise of cable telephony or wireless as a substitute for wireline, he said. The very idea of wireless substitution was “laughed at,” while today, “more than a third of all U.S. households are wireless-only,” he said. Regulators can’t see the future, and “the last thing we want to have is the government to somehow pre-empt, or nip in the bud, innovation that’s coming over the horizon. … Let’s be patient, let’s be optimistic, and let’s not try to think that we're smarter than the markets."
May 7 will be the six-month anniversary of AT&T’s petition to open a proceeding on the TDM-IP transition, and the FCC has yet to act, said AT&T Senior Vice President-Federal Regulatory Robert Quinn. In AT&T’s wireline footprint, only 25 percent of housing units are connected to the old POTS infrastructure, and that number is as low as 6 percent in Michigan, Quinn said. “The transformation is not only under way; it’s almost done,” he said, as McDowell nodded in response. But from a technical perspective, switching from TDM architecture to IP architecture is a “huge undertaking,” he said. “We don’t even know what all the questions are, let alone all the answers": That’s why a comprehensive proceeding at the FCC makes sense, he said.
Quinn criticized CLECs for seeking rules that would let them profit without building the infrastructure themselves. Such regulation would take the industry back to the TELRIC wars (CD Dec 18/03 p6), Quinn said, and would be a “huge disincentive” to infrastructure investment in this country. When countries start enabling low-cost access to fiber and force deployment, “you're going to end up right where Europe is today,” he said. “I think it’s wrongheaded. I'm not afraid of that discussion.” Quinn also questioned the idea of Section 251-style regulation of IP interconnection. Real-time IP-to-IP communication is only starting to emerge, he said. “Let’s have some patience and see how this develops,” he said. Quinn envisions a limited number of points of interconnection in the U.S., and doesn’t envision carriers having to interconnect in every state. “Bringing the states and the municipalities back into the game makes it look like we need to have interconnection here,” he said.
CenturyLink looks forward to participating in the wire center trials, said CenturyLink Vice President-Federal Relations Melissa Newman. CenturyLink agrees with AT&T’s proposed phased approach that would allow for “meaningful market trials” that let telcos resolve issues as they arise in a controlled environment. Newman also cautioned against regulators trying to write the rules to govern the TDM-IP transition upfront, recommending instead that problems be resolved on a “case-by-case basis.” A one-size-fits-all approach won’t work, Newman said, as each company has its own unique challenges.
Pai wouldn’t have supported the Open Internet order had he been a member of the commission when it was passed by a 3-2 margin (CD Dec 22/10 p1). “I take the general view that the net neutrality rules were a solution in search of a problem,” Pai said. Pai has “serious legal questions” about the commission’s authority to adopt them, he said. Pai also criticized the commission’s finding that broadband is not being deployed on a reasonable and timely basis, which triggers its Section 706 authority. “There’s no question” that it is, he said. “The fact that all these companies are making such massive capital expenditures to provide broadband suggests to me that the market is becoming increasingly competitive,” Pai said. “We shouldn’t downplay the state of competition for the sake of either political convenience, or an excuse to adopt some of the 706 enhanced authority for the commission to regulate.”