With a 5-0 vote on January 30 to approve an AT&T petition that allows voluntary trials of all-Internet Protocol (IP) communication networks, the Federal Communications Commission (FCC) has recognized the inevitable: communications networks are rapidly changing from circuit-switched Time Division Multiplexing (TDM) technology running on copper wires to IP technology. The bi-partisan FCC vote recognizes that it is time to begin serious work on the thorny transition issues as the industry converts old fashioned phone networks with modern ones necessary to the nation’s modern commerce. This order is important to California IT managers who purchase from incumbent telephone companies like AT&T or Verizon.
The FCC estimates that 40% of households in the U.S. have “cut the cord" to their wireline telephone and receive wireless voice services only. According to estimates from the trade group U.S. Telecom, by the end of 2013, less than 30 percent of homes will rely on the switched network as their primary voice provider. Further, according to Commissioner Jessica Rosenworcel, the number of TDM-based landline telephone access lines have gone from 200 million in year 2000 to only 96 million in December 2013, reflecting a move towards interconnected Voice Over Internet Protocol (VOIP) of 42 million lines.
As a result of these massive shifts in communications technology, the large incumbent phone companies like AT&T and Verizon have a "white elephant" on their hands with the aging copper-based networks. To remain competitive with other broadband companies such as the cable companies, they need to transition their TDM technology wireline voice networks to VOIP services that will run on multi-purpose IP-based broadband networks. However, federal and state regulatory wheels turn oh-so-slowly, especially with hot potato social issues like universal service and Lifeline services. An FCC Technology Transitions Task Force has been working on these transition issues for over a year, resulting in this long awaited FCC action.
In its Order and Notice of Proposed Rulemaking last week, the FCC took a major first step into allowing one year "voluntary experiments" – or what Commissioner Rosenworcel call "sandbox" trials in Silicon Valley start-up jargon — on how IP-based networks impact users. Service providers may submit proposals for transition trials the FCC by February 20, 2014, followed by public comment and reply periods ending on March 31, 2014, with a final decision scheduled for the FCC’s May 2014 meeting. The providers are invited to submit proposals to initiate tests of IP-based alternative to existing services in discrete geographic areas or situations.
The FCC said it would evaluate the proposals using these four "enduring values" underlying its stewardship of the telephone networks: (1) public safety; (2) universal access; (3) competition; and (4) consumer protection. Three special areas of concern that the FCC highlighted were how to deliver robust broadband to rural areas, disability access in an all-IP network, and telephone numbering in an all-IP world.
FCC Chairman Tom Wheeler, a Democrat, said the transition will be "a good thing because IP networks are more efficient, which can enable better products, lower prices, and massive benefits for consumers."
"At this critical juncture, let me be clear about a few things," wrote Chairman Wheeler in his separate Statement on the Order, "One, we favor technological innovation. And two, we affirm the enduring values of the Network Compact: universal service, public safety, competition, and consumer protection. Our challenge is to preserve the values that consumers and businesses have come to expect from their networks, while unleashing new waves of investment and innovation."
"Technology changes but our values do not," said Commissioner Rosenworcel, also a Democrat, in her written statement, in approving the "four enduring values" cited in the FCC Order. "These are our guideposts in everything we do. Technology changes, but our values do not."
"[W]e cannot continue requiring service providers to invest in both old networks and new networks forever," said Republican Commissioner Ajit Pai in his Statement. "Every dollar that is spent maintaining the networks of yesterday is a dollar that can’t be invested in the networks of tomorrow. And our goal should be to maximize investment in IP infrastructure so that high-speed broadband extends to every corner of our country. . . We must still repeal the many outdated rules on our books based on the principles of 19th century railroad regulation."
Pai’s separate statement reflects that the FCC Order will not delay the second phase of the Connect American Fund to bring access to next generation technologies to rural Americans, and a proposal to redirect funding the FCC set aside in 2012 for a skilled nursing facility program, that he believes was unlawful.
Commissioner Mignon Clyburn, a Democrat, expressed concern about low income and rural Americans being able to afford and have access to advanced telecommunications and information services reasonably comparable to urban areas. She also expressed support for rural healthcare broadband experiments, to ensure access for advanced telemedicine and remote monitoring services.
New Republican Commissioner Mike O’Rielly said in his Statement that he believed the FCC’s Order as to the trials reflects too many conditions and presumptions particularly as to cybersecurity that are not supported data, law or rules. He concurred in the part of the decision as to rural broadband experiments, expressing concern that the new experiments may divert universal service funding from completing reforms already adopted. He also showed concern about over-collecting funding from ratepayers and using the reserved funding to launch pilot programs or experiments.
Industry reaction was positive. CALinnovate’s Executive Director Mike Montgomery issued a statement saying, "Today’s FCC vote will go down in history as the beginning of the next great digital transformations in our nation’s history. Technology companies of all sizes as well as consumers will benefit greatly from Internet Protocol networks. The California technology community – which paved the way with its forward looking IP legislation in 2012 [authored by State Senator Alex Padilla] – will be observing the trials closely, looking forward to the opportunity to build upon the networks of the future."
