It’s Time to Start the Conversation on the IP Transition…

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Every now and then, a genuine and radical change occurs in the telecommunications business that can no longer be ignored and, as such, a policy response can no longer be postponed.  In the past, these cycles have been relatively long, but today significant supply-side and demand-side shocks seem common.  Such is the case of the need to develop a cohesive regulatory paradigm to manage the complicated issue of facilitating the transition from legacy TDM networks to the more efficient IP-based networks.

For those of us who study telecom policy closely, the need for the Federal Communications Commission to start to develop a cohesive policy framework to manage the transition from TDM to IP-based services is no surprise and long overdue.  As the National Broadband Plan warned nearly three years ago,  the “challenge for the country is to ensure that as IP-based services replace circuit-switched services, there is a smooth transition for Americans who use traditional phone service and for the businesses that provide it.”

But given the enormity and complexity of the challenge, where do we begin?

Fortunately, there is no shortage of constructive ideas.  For example, the National Broadband Plan suggests that the Commission:

start a proceeding on the transition that asks for comment on a number of questions, including whether the FCC should set a timeline for a transition and, if so, what the timeline should be, quality of service requirements and safeguarding emergency communications. This proceeding should consider questions of jurisdiction, regulatory structure and legacy voice-specific regulations, including interconnection, numbering and carrier of last resort obligations.  It should consider the impact of the transition on employment in the communications industry, particularly given the historic role of the sector in providing high-skill, high-wage jobs.  In the proceeding, the FCC should also look at whether there are requirements from other federal entities, such as tax requirements, that would affect the path of the transition. (National Broadband Plan at p. 59)

Recently, Commissioner Ajit Pai expanded on the National Broadband Plan’s call to action by suggesting the formation of an IP Transition Task Force at the FCC.  According to Commissioner Pai,

This Task Force would study how to hasten the Internet transformation. It would help us modernize the Commission’s regulations. And it would allow us to account for and accelerate the dramatic technological and competitive revolution in the industry.  We need to adopt a holistic approach to confronting this challenge instead of addressing issues on a piecemeal basis as they happen to pop up.

The work of the Task Force will be as daunting as it is necessary, for we simply cannot import the broken, burdensome economic regulations of the PSTN into an all-IP world.  Rather, we must construct a forward-looking deregulatory framework that facilitates infrastructure investment and technological innovation.  I also expect that the Task Force would recommend the repeal of old-world regulations that no longer make sense in a competitive, all-IP world.  That means scouring the Code of Federal Regulations to track down and remove all the tariffs, the arcane cost studies, and the hidden subsidies that distort competition for the benefit of companies, not consumers.  While these rules remain on the books, extending them to IP may just be too tempting.

At the same time, the Task Force must preserve the vital consumer protections that are still likely to be needed in an all-IP world. For instance, when consumers dial 911, they need to reach emergency personnel.  It shouldn’t matter whether they are using the PSTN, a VoIP application, or a wireless phone.

If the Task Force does its job right, and if the Commission follows through, we will have gone a substantial way towards ending the regulatory uncertainty that has slowed broadband deployment through the country.

Even the private sector is trying to engage in the debate constructively.  For example, in order to help aid the Commission and the industry work through this difficult transition, AT&T—who just announced that it intends to make a staggering $6 billion dollar investment into their wireline network (along with a concurrent $8 billion investment into their wireless network) to accelerate the transition of their legacy TDM architecture network to a modern and efficient all-IP network—recently requested that the agency “establish a new proceeding to conduct, for a select number of wire centers, trial runs for a transition from legacy to next-generation services, including the retirement of TDM services and offerings.”  This kind of cooperative opportunity is indeed rare in Washington, and the Commission must seize the moment.  Should the agency decide to act on AT&T’s novel petition, as well as incorporate Commissioner Pai’s excellent idea of establishing an “IP Transition Taskforce” and the suggestions of the National Broadband Plan mentioned above, we may now actually have a procedural vehicle for the FCC to develop a policy paradigm that will enhance Broadband Service Providers’ incentives to increase deployment of advanced IP-based infrastructure to American consumers.

That said, as we work our way through the IP transition, I have no doubts that there will be lots of bumps in the road.  While this challenge will certainly be difficult enough given the legal and technical issues involved, I also suspect that we will see tremendous opposition to developing a smooth transition from companies whose business plans are based upon arbitraging the current system.  But such is the nature of the modern telecommunications policy debate.  Without question, there are many stakeholders who benefit from the status quo and are adverse to change.  Yet, whether we like it or not, TDM architecture is rapidly becoming antiquated and, equally as important, we need to push fiber further down into the network to mitigate spectrum exhaust.  As a result, broadband policy must adapt for the greater societal good.  Indeed, the caselaw is clear that the FCC may not “subordinate the public interest to the interest of ‘equalizing competition among competitors’.”  If the Commission is truly serious when it says that “Broadband is the great infrastructure challenge of the early 21st century” (NBP at 3 and emphasis in original), then it’s high time the various stakeholders all stopped quibbling over the rents and focus on the big challenge before us.

Fortunately, as the National Broadband Plan recognized, the TDM to IP transition “is not the first time the United States has overseen a transition in communications.” Indeed, as the National Broadband Plan pointed out, we managed to survive the transition from mobile analog to digital service and, more recently, the transition from analog to digital broadcast television.  Yet, in each case, the NPB noted that “government policies helped ensure that legacy regulations and services did not become a drag on the transition to a more modern and efficient use of resources, that consumers did not lose services they needed and that businesses could plan for and adjust to the new standards.”  (National Broadband Plan at p. 59.)  Given the stakes at hand and the investment money on the table, let’s hope that the current FCC pays heed to the actions of its predecessors.