Cable and Telecommunications News from Mendoza Law Office, LLC

A WAKE UP CALL, A SHOT ACROSS THE BOW, OR BOTH?
AT&T'S CALL FOR THE END OF POTS

Last month, AT&T filed comments in response to the FCC's Public Notice #25 in its National Broadband Plan docket seeking comments from the public on the transition from the legacy circuit-switched network that provides Plain Old Telephone Service (POTS) to an all IP-based network. AT&T's comments called for the FCC to establish a fixed deadline by which America's entire telecommunications infrastructure would be IP-based. AT&T called the legacy public switched telephone network (PSTN) and POTS "relics of a by-gone era." AT&T's stated that the POTS business model "is in precipitous decline," with less than 20% of Americans relying exclusively on POTS for voice service, 25% of households having "cut the cord" entirely, and 700,000 additional lines being abandoned each month.

AT&T also asserts that telephone companies are being forced by the current federal and state regulatory regime to fund two networks, the new IP-based network, and the outdated legacy telephone network. AT&T asserts that federal and state regulatory requirements designed for the by-gone POTS era, such as carrier-of-last resort obligations (COLR) and tariffing requirements "preclude service providers from abandoning POTS in response to technological change and market demand." According to AT&T, the combined effect of these continuing POTS-legacy regulatory requirements is to require ILECs to divert capital investment resources away from broadband investment and toward the maintenance of the antiquated POTS network.

AT&T presented a comprehensive explanation of the prerequisites necessary for achieving the completion of the national transition to POTS. AT&T noted with earnest that most of its recommendations require FCC action on dockets that have languished before the FCC for a long time:

1. Assert exclusive federal jurisdiction over IP Services. AT&T called on the FCC to follow-through on the statements it made in the FCC's Vonage Order preempting the Minnesota Public Utilities Commission's attempt to exert state jurisdiction over Vonage's nomadic VoIP voice service. As a result, AT&T argues, states "continue to express uncertainty regarding the scope of their jurisdiction over new and evolving IP-based services, thus undermining the regulatory certainty and stability that is necessary to foster development of VoIP and the broadband facilities over which it rides."

2. Reform Intercarrier Compensation and Universal Service. With respect to intercarrier compensation, AT&T candidly asserts, "the time for platitudes is over." AT&T argues that "if voice service becomes just another application on a high-speed, packet-switched network, then switched access charges, reciprocal compensation, any other forms of intercarrier compensation will presumably disappear - along with the inefficiencies, regulatory disparities, and arbitrage opportunities that currently accompany these charges." AT&T urges the FCC to act immediately on this issue, arguing that if the FCC does not act, "it will be next to impossible to shift to an IP-based framework for the exchange of all traffic down the road." AT&T also argues that the federal universal service high-cost support program should be reformed to fund broadband, rather than the POTS network, and that the universal service surcharge mechanism should be reformed "in a manner that more closely reflects the changing cast of providers who benefit from the shift to broadband."

3. Eliminate All State Legacy Regulatory Requirements. AT&T asserts that the POTS to IP transition cannot occur successfully "without transitioning away from the legacy state regulatory requirements that force continued investment in and maintenance of the PSTN." According to AT&T, this requires "the elimination not only of all legacy state requirements that mandate the continued provision of POTS, but also any such requirements that hinder the retirement of physical network assets used to provide POTS."

4. "Build Upon" the FCC's Refusal to Impose Unbundling Requirements on "Next Generation Loop Architecture." AT&T claims the FCC's deregulatory policy in this area "has resulted in an enormous amount of investment in broadband and made the goal of universal broadband within reach." AT&T also recommends the FCC seek comment on how to "best ensure that the existence of [state commission-approved interconnection agreements] does not impede the transition from POTS to IP by "preventing providers from retiring legacy facilities and services."

Link: AT&T Comments to FCC