Nature of FCC and State Roles in VoIP Differs Based on Stakeholders’ Position

Competing views were partly displayed in filings on a petition by the Voice Communication Exchange Committee (which also uses the acronym VCXC) seeking an FCC notice of inquiry on common HD voice implementation to replace the current standard definition associated with the public switched telephone network (PSTN). With that comment cycle closed Tuesday in docket 13-5(http://bit.ly/1w2bIXZ), Part I of this story noted that no stakeholder would oppose an NOI and all would welcome voice quality that backers including VCXC founder and Vonage co-founder Daniel Berninger said covers twice the octave range as SD voice (CD July 10 p5). Berninger and Executive Director Glenn Richards of the Voice on the Net Coalition -- which includes AT&T, Google, Microsoft’s Skype, and Vonage -- said VoIP belongs as a Title I service and doing otherwise could hurt the rollout of HD voice.

Executives of incumbent LECs that have long asked the FCC to formalize what both sides say is its de facto treatment of VoIP as an information service said the agency shouldn’t accede to calls for reclassification as part of a move to HD voice. NARUC and General Counsel Brad Ramsay said the commission shouldn’t waste its time on an HD voice inquiry without also moving to deem VoIP and subsets of it like high definition a telecom service. “We save a lot of time” if “we just determine what the proper framework is that has to apply” to VoIP, said Ramsay. “Vonage has led the fight for it not being classified.” NARUC has backed state arbitration of interconnection deals under Telecom Act sections 251 and 252, noted Ramsay.

That’s not to say Ramsay wouldn’t back HD voice, nor that NTCA wouldn’t, either. Ramsay and NTCA Senior Vice President-Policy Michael Romano said they agree with VoIP backers that HD voice likely would benefit consumers. It would need to have interconnection rules to work, they said. ILECs and VoIP backers said they disagree.

VoIP is “just” a telecom service “using a different network technology,” said Romano. “Those providing VoIP should be carriers who can then interconnect on a technology-agnostic basis in accordance with the” Telecom Act, he said. “Underlying network technology provides no basis for differential regulatory treatment of functionally equivalent services that ride atop them.” State regulators “need to be cops on the beat” on HD voice, said Romano. “When things break down and there aren’t rules of the road, it doesn’t matter how high quality HD voice is.” Regulators should have a bigger role than overseeing technical standards, which is the only role Berninger and allies said they seek, according to Romano. “A lot of times, a lot of folks want to press forward on these things” and see it “as an escape valve from regulation and accountability,” he said.

Transition Date

Interconnection will happen on its own, without the FCC or states requiring it, for an all-IP phone system to replace the PSTN, said VoIP backers and executives from AT&T, Verizon and the Telecommunications Industry Association. Some of their views differ on how soon the IP transition can occur, with Berninger the most optimistic, saying it could happen in 2018, which he and others noted is the timeframe an FCC Technological Advisory Committee working group targeted a few years ago.

AT&T Vice President-Federal Regulatory Hank Hultquist said 2018 might be possible as a time to have all-IP interconnection agreements. But a total phaseout of all TDM services might not be finished at AT&T until 2020, and some other telcos have time frames beyond that, he said. TIA Director-Regulatory & Government Affairs Mark Uncapher said a 2018 flashcut to all-IP phone service is “more ambitious” now than when the TAC working group recommended that target a few years ago. “As the investment is going forward, it’s not as though there’s not substantial movement toward that taking place,” he said of an eventual IP transition. TIA members include 3M, Alcatel Lucent, Ericsson and other telecom equipment makers.

Having a transition to HD voice must be “a collaborative effort,” said Berninger. He’s “trying to herd the cats” in his role running the nonprofit VCXC and “providing the glue between the companies” like AT&T and Verizon that are doing all they can to move to HD voice on a unilateral basis, he said. “We're working on rallying the vendors. The service providers are still saying to themselves we're all deploying HD voice, but we don’t necessarily want the FCC to weigh in on this.” Verizon is providing HD voice to some business landline customers, said Vice President-Public Policy David Young. AT&T hasn’t disclosed any plans to introduce the service to wireline subscribers, said Hultquist.

Where HD voice’s rollout will pick up steam in the near term is to wireless customers, as part of carriers’ efforts to provide voice over LTE, said Hultquist and Young. That’s “where you'll really see it next,” said Young. “That’s where you will see it become kind of more of a mass-market thing.” AT&T began rolling out wireless HD voice in some markets including Chicago in a “controlled way” in June, said Hultquist.

VoIP and ILEC interests agree there’s no need for interconnection rules or reclassification of VoIP as a Title II service. They say commercial agreements are working fine already for IP, with some saying if it doesn’t work in the future, a regulatory role could be considered.

Reclassification Called Unnecessary

There’s no need to rely on Telecom Act Section 251 for VoIP, since interconnection will occur voluntarily, said some backers of the technology. “The telephone network and the coming all-IP network are different animals,” said VCXC’s Berninger. “There was no incentive (disincentive) to interconnect networks creating” the PSTN, because that network “with a fixed service and fixed customer base represented the textbook zero sum game,” he said. Not so with all-IP, with a “virtuous cycle of upgrades providing a positive incentive to interconnect,” he said. “The question needs to get resolved in practice with interconnects emerging voluntarily by 2018. ... If the interconnects do not happen in a timely manner, then we can resort to regulatory solutions."

"HD voice is kind of a great laboratory to see how necessary IP interconnection is,” in terms of mandates, said AT&T’s Hultquist. “We either will or won’t see widespread interconnection occur without regulation.” AT&T expects that HD voice “will be ubiquitously interconnected without any regulation,” as the company and others including carriers entering into that space “will successfully interconnect their services without any additional regulation,” said Hultquist. Deeming VoIP a telecom service “would open the door to unknown proceedings” in the states that don’t have laws barring regulation of VoIP, IP or like services, said Hultquist. He noted that in approximately 2003 AT&T petitioned the FCC to classify all IP services as information services.

Verizon for landline and wireless service has eight voluntary IP-to-IP interconnection deals, with companies including Comcast, Vonage and wireless carriers, said Young. “We are actively negotiating and entering” into such deals, he said. “We know the market can work. ... We think the FCC should allow the market to keep working.” The pacts “are working well, and we think they will work well for HD voice as well, so we don’t think there is any need to classify VoIP as a Title II service or impose any interconnection regulation or obligation,” said Young.

For CenturyLink, “questions regarding whether or how to regulate this nascent technology are premature and inappropriate,” said Steve Davis, executive vice president-public policy and government relations, in a written statement. “The market should be allowed to develop and, in the unlikely event any major issues arise, they should be addressed only after they emerge and can be properly assessed.”

Three FCC orders in 2004 and 2005 indicated that VoIP is a Title I service, and the agency has said since then that it’s not classifying the service, “so there is a level of ambiguity around it,” said Pillsbury Winthrop telecom lawyer Richards, also of the Voice on the Net Coalition. “But they have been using Title I” as a statutory hook for applying obligations on VoIP and “are treating it more like an information service,” he said of the commission. “If you're going to classify VoIP as something, you should classify it as an information service.” Other “than ‘everyone should be treated the same,’ there doesn’t seem to be a rationale for why we should regulate VoIP differently than we have” for many years, he said. Richards’ coalition, like TIA, backed VCXC’s petition, while the major telcos didn’t file comments.

"IP-peering and network management are able to facilitate a broad range of specialized IP based services without interconnection requirements,” said TIA’s Uncapher. “There is an FCC facilitation role” for the move to HD voice, he said. NARUC’s Ramsay said an FCC examination of how to classify VoIP is needed, and moving forward otherwise could make people think the battle is lost for deeming it a Title II service: “In Washington, half the battle is if you can get people to argue on your terms” that HD voice is beneficial and so the commission should move forward without considering the regulatory implications. (jmake@warren-news.com)