FCC Seen Approving IP Tech Transition Orders on Competition, Consumers
The FCC likely will approve two tech transition orders Thursday targeting competition and consumers as telcos move from copper-based phone networks and services to IP-based broadband systems, people involved in the proceeding said this week. A draft order to ensure competitive LECs have access to “reasonably comparable” incumbent LEC wholesale replacement services could draw Republican dissent, while a draft order requiring providers to offer consumers back-up power options has a better chance of being approved 5-0, some telecom industry officials told us. “It seems like the draft orders do have some momentum,” one official said. Also on the agenda Thursday for the FCC’s monthly meeting is a notice of inquiry on broadband deployment and several wireless and spectrum auction items.
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FCC Chairman Tom Wheeler circulated two IP transition draft orders, including one to require ILECs to notify consumers and competitors of copper retirement plans, and offer competitors replacement wholesale services at rates, terms and conditions that are reasonably comparable to those of legacy services, officials said last month (see 1507100050). It also would define copper retirement in a way “to prevent retirement of networks by neglect” (also called “de facto retirement”), an FCC fact sheet said.
The other draft order Wheeler circulated would require providers to inform consumers about electrical power limitations and give consumers the option of buying at least eight hours of backup power capability, and 24 hours of backup power capability within three years. The consumer-oriented draft “has broader support at the commission and in general,” said one industry official. “I don’t see many changes to that one,” said another.
CLECs have pressed the FCC to ensure ILECs can’t use the transition to raise rates for incumbent special-access services used by wholesale and retail business customers. “We are pleased with the [draft] order,” said Comptel President Chip Pickering on a conference call hosted Tuesday by Public Knowledge. He said the draft was supported by an unprecedented coalition of competitors and business customers. But ILECs said the critics are seeking unjustified regulation that will slow the industry move to advanced IP-based systems over higher-capacity fiber connections. Jon Banks, USTelecom senior vice president-law & policy, said in a statement Tuesday that ILECs hope the FCC “will pave the way for the rest of America to make the transition to new broadband and mobile communications networks that 80 percent of Americans have already chosen.”
“My sense is they’re plowing ahead with the draft the chairman circulated,” an industry official told us. Another didn’t expect the FCC to back off the draft’s reasonable comparability standard but said some details might be modified. Both officials and others thought there was a decent chance the vote could draw at least one Republican dissent. “This seems more headed toward 3-2,” said one official. A person familiar with the proceeding said FCC discussions continue and changes are still possible, but the draft’s approval is “probably not in danger.” Pickering said he's confident the draft will have the support of the commission and there won’t be last-minute changes sought by ILECs. “It’s a strong order and we feel very confident in the chairman’s leadership on this issue,” he said.
Wheeler’s proposed ILEC replacement service standard of reasonable comparability modified a November NPRM’s proposal to require “equivalent” wholesale access. Under the draft standard, the FCC would review the “totality of the circumstances” in any disputes over replacement services, including consideration of five principles proposed by Windstream (a combination CLEC/ILEC), FCC and industry sources said. “CLECs shouldn’t worry about the change from equivalent to 'reasonably comparable' because it appears they basically mean the same thing, given the way the FCC draft is framing things,” said an informed source.
AT&T has warned the FCC not to insert itself into commercial agreements negotiated between parties. The FCC shouldn't regulate ILEC special access rates, including for ethernet services that were granted forbearance relief a decade ago, AT&T said in filings in docket 13-5 (here and here). Windstream said AT&T had “doubled down on its regulatory bait-and-switch” on ethernet services that were given relief in part because of the existence of ILEC special access services that could be discontinued. The FCC must ensure ILECs can’t “use the IP transition as an unjustified excuse to raise prices,” Windstream said.
Verizon has pressed the FCC not to include de facto retirement in its definition of copper retirement, which requires telcos to file discontinuance applications under Section 214 of the Communications Act. Verizon continues to dispute that de facto retirement is an issue and says it has spent more than $200 million since 2008 on its copper network, which remains “healthy.” Verizon said if the FCC nevertheless includes de facto retirement in its copper retirement definition, it should establish two “safe harbors”: for ILECs that have deployed fiber in the area or that meet certain state service standards.
Xchange Telecom, a facilities-based CLEC in the New York and New Jersey metropolitan markets, pushed back against the Verizon arguments in detailed filings on the network problems it had encountered (here and here). The Communications Workers of America said Verizon’s $200 million in copper spending was self-incriminating, representing a “paltry 0.39 percent” of its total wireline capital expenses of $50.7 billion since 2008. “There can be no more powerful evidence of Verizon’s neglect of its copper network than the fact that it has spent virtually nothing on that network for more than seven years,” CWA said.
The FCC draft considers the wholesale proposals “interim” measures until it completes a broad special-access proceeding. ILECs have asked the FCC to impose a two-year sunset on the IP transition rules to ensure they truly are interim. CLECs say such a sunset is unnecessary.