Broadband Discussions Dominate Close of NARUC Summer Meeting

The NARUC board Wednesday adopted without change six telecom resolutions approved by the Telecom and Consumer Affairs Committees. The first three urge the FCC: (1) to require VoIP carriers and other non-certificated telecom providers to comply with numbering administration rules and report their phone number usage. (2) To allow states to collect broadband deployment data that is different from whatever broadband data the FCC collects. (3) To take immediate, aggressive action, in concert with states and other government agencies, to develop business education programs to combat trade frauds perpetrated through IP relay services.

The other resolutions: (4) Accept a task force discussion paper addressing accounting and cost issues of broadband over power lines. (5) Urge the FCC to review wireless contract termination penalties to see if they still serve a legitimate market purpose for carriers and consumers. (6) Commit NARUC to working with the FCC and other public and private agencies on consumer education for the 2009 transition from analog to digital television broadcasting.

A seventh resolution, calling for any federal universal service reforms to be competitively and technologically neutral, never reached the NARUC board (CD July 18 p4). It failed in the Telecom Committee due to discord among states over whether the resolution should be a call to preserve adequate rural universal service support in any reform effort, or a swipe at a Joint Board recommendation to cap universal service subsidies to wireless carriers.

The NARUC board also authorized its research arm, the National Regulatory Research Institute (NRRI) to sever its 25-year-old hosting agreement with Ohio State University (OSU)and relocate to the Washington, D.C., area by the end of 2008. NRRI, until now a unit within OSU, contracted with NARUC to provide research services. OSU was responsible for NRRI costs and liabilities, but NARUC provided financial support from dues. Under the new deal, NRRI will become an independent, tax-exempt, non-profit research corporation governed by a new 12-member board and maintaining ties to NARUC. NRRI officials said operational constraints at OSU kept it from responding quickly to regulators’ research requests, hire outside consultants, and recruit knowledgeable volunteers.

Broadband Deployment Ideas Aired

At a broadband deployment panel, Vermont Public Service Board Commissioner John Burke described his state’s broadband telecom authority, created through legislation and regulatory efforts to achieve universal availability of broadband service. He said the idea of broadband competition is good, “but you have to have coverage first.” Burke said the effort aims to make broadband available to every Vermonter by 2010. The plan is to use $40 million, raised through a state bond issue, to deploy infrastructure

Mark McElroy, senior operations vice president for ConnectedNation, described the success of the ConnectKentucky project that helped make broadband available to 93 percent of Kentucky households. He said the program is branching into neighboring Tennessee. He said the keys to the project’s success were knowing what facilities and services already existed, and working community by community to meet local technology needs.

John Gibbs, Comcast vice president for government affairs, said the vast majority of Americans have access to cable modem service and other broadband options, so any state efforts to promote broadband should focus strictly on unserved areas. He said states’ first priority should be to identify unserved areas, then partner with federal agencies to prevent duplication of government deployment efforts.

Beth Shiroishi, AT&T senior regulatory policy director, said broadband initiatives should focus on each state’s unique needs. She said some aspects of broadband service, such as the technical, are better handled federally. Anna Gomez, Sprint Nextel vice president for government affairs, said any national broadband plan should ensure that carriers “can deploy networks competitively, without contending with unfair subsidies.” Link Hoewing, Verizon vice president for technical policy, said the U.S. already has a national broadband competition policy. “We've been promoting broadband platform competition, and it’s been working to promote investment, deployment and new technologies,” he said.

It’s tough to decide whether the legacy regulatory framework of the 1996 Telecom Act and predecessor statutes helps or harms availability of broadband and other advanced telecom services, said NARUC panelists Wednesday. Paul Vasington, Verizon state policy director, said the key question in assessing legacy regulation is: “Would we adopt this policy today?” He said policies like subscriber line charges and mandatory cost-based UNE platforms never would fly today. When the FCC killed mandatory UNE-P service in 2005, it spurred fiber investment, he said.

David Conn, T-Mobile state policy director, said public policy turns to regulation after a market failure or when policymakers dislike results market forces produce. He said market failures occur when expected competition just doesn’t happen, as with special access. He cited wireless termination fees as an example of policymakers not liking the market’s results. “Most wireless consumers want the contract benefits made possible by the fees and choose plans with them. Regulators haven’t liked this and see a need to address a nonexistent problem.” He said regulators’ primary data on market performance comes from producers, not consumers. “If you want to see how well the markets are functioning, look at how most consumers behave,” he said.

Consultant Joe Gillan said the evolution of telecom networks into 100 percent packetized IP networks will create new interconnection disputes requiring regulatory intervention. “Interconnection has been fought over in this industry for over 100 years and will be fought over again when all telecom services become managed packets.” He said packetized networks following IP and other packet protocols are “islands” that interconnect with legacy networks “by making their new technology look like the old technology.” As managed packet networks displace circuit switched networks, “we'll reach a point where one packet network wants direct interconnection with another, and regulators will be called in to force that interconnection to happen.”

On legacy copper networks, Kristen Shulman, state regulatory vice president for XO Communications, said regulators should not let incumbents disconnect copper facilities without any review when fiber goes in. She said copper lines have use for competitive broadband and voice grade service. But Verizon’s Vasington said regulatory edicts barring retirement of old facilities can deter investment in needed new facilities.

Steve Davis, Qwest senior vice president for law and policy, said legacy regulation’s most pernicious effects come from subsidies created under it. “All subsidies distort markets,” he said. “Some subsidies may have had a valid policy purpose when they began, but they hung on long after their original purpose was served. Subsidies are addictive, tough to stop. Those who are getting subsidies want to keep them.”