Is the FCC Seeking to Help Internet Consumers or Preserve Its Own Jurisdiction?

by on May 13, 2013 · 0 comments

As the “real-world” continues its inexorable march toward our all-IP future, the FCC remains stuck in the mud fighting the regulatory wars of yesteryear, wielding its traditional weapon of bureaucratic delay to mask its own agenda.

Late last Friday the Technology Transitions Policy Task Force at the Federal Communications Commission (FCC) issued a Public Notice proposing to trial three narrow issues related to the IP transition (the transition of 20th Century telephone systems to the native Internet networks of the 21stCentury). Outgoing FCC Chairman Julius Genachowski says these “real-world trials [would] help accelerate the ongoing technology transitions moving us to modern broadband networks.” Though the proposed trials could prove useful, in the “real-world”, the Public Notice is more likely to discourage future investment in Internet infrastructure than to accelerate it.

First, the proposed trials wouldn’t address the full range of issues raised by the IP transition. As proposed, the trials would address three limited issues: VoIP interconnection, next-generation 911, and wireless substitution. Though these issues are important, the FCC proposals omit the most important issue of all – the transition of the wireline network infrastructure itself. As a result, they would yield little, if any, data about the challenges of shutting down the technologies used by the legacy telephone network.

Second, the proposed trials are unlikely to yield significant new information. As Commissioner Pai noted in his statement last week, all three issues are already being trialed in the “real-world” by the industry, consumers, and state regulators.

Finally, and perhaps most importantly, all three issues are already the subject of ongoing FCC proceedings and don’t raise any new issues (e.g., issues that would implicate FCC regulatory forbearance).

If the FCC truly wanted to accelerate the transition to all-IP infrastructure, why would it propose studies of three limited issues that it is already addressing? I expect the FCC was unwilling to propose a comprehensive trial that could jeopardize its assertion of regulatory jurisdiction over the Internet, especially its potential authority to impose Title II regulations if it loses the net neutrality case pending in the DC Circuit. The language in the Public Notice indicates it is no coincidence that the narrow issues the FCC intends to study do not implicate its forbearance authority or (at least directly) the scope of its jurisdiction. For example, the Public Notice states that VoIP interconnection involves, among other things, “pricing” and “quality of service” issues, and that the FCC wants to structure any trial to provide it with “data to evaluate which policies may be appropriate” for VoIP interconnection. This language clearly indicates that the FCC is contemplating Title II pricing regulation of VoIP interconnection.

The Public Notice also seeks additional comment on the more comprehensive approach to the IP transition originally proposed by Commissioner Ajit Pai in July 2012, but in a way that sends all the wrong signals to investors.

When Commissioner Pai proposed the establishment of a Task Force for the IP transition nine months ago, his intent was the removal of regulatory barriers to infrastructure investment, including unpredictability at the FCC. He suggested that the FCC send a clear signal that new IP networks built in competitive markets will not be subject to “broken, burdensome economic regulations” designed for monopoly telephone networks.

Last Friday’s Public Notice does just the opposite. It signals that even the worst excesses of legacy telephone regulation are still an option for the Internet. Specifically, the Public Notice “invites” telephone companies that are interested in comprehensive trials to submit a comprehensive plan listing, at a minimum:

(1) all of the services currently provided by the carrier in a designated wire center that the carrier would propose to phase out; (2) estimates of current demand for those services; and (3) what the replacement for those services would be, including current prices and terms and conditions under which the replacement services are offered.

It is telling that none of these enumerated questions are aimed at the potential technical issues posed by the IP transition (which is a forgone conclusion economically). They are aimed at economic issues relevant to the FCC’s traditional Title II price regulation of communications services.

In the nine months since Commissioner Pai began leading the IP transition, the FCC has signaled nothing more than its intent to continue bureaucratic business as usual. As the “real-world” continues its inexorable march toward our all-IP future, the FCC remains stuck in the mud fighting the regulatory wars of yesteryear, wielding its traditional weapon of bureaucratic delay to mask its own agenda. There it will remain until the FCC has a Chairman with a vision for the future, not the past.

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