Over the last couple of days Ive taken some time each day to read through the telecommunications bill which is being proposed as an update to the Telecommunications Act of 1996. The discussion draft is currently a relatively slim 77 pages in length. No doubt that, as the proposal makes it way though the halls of Congress, many amendments and revisions will be made. I did, however, want to provide some sort of assessment based on an actual read of the bill. Granted, I am not a lawyer, but I would like to try to give this analysis some justice.
As somebody with a background in telecom and not law this was very hard to read. Despite the specificity of the legal language, the draft is still rife with generalities and vague technical references. Lesson number one for me is that legal specificity does not constitute technical specificity. As one who is more well versed in the latter, I found this document a little bit lacking and potentially leaving some holes both for innovation and abuse based on potential technical interpretations of the legal text. I find myself dying for some sort of companion piece which relates to the service elements the bill is trying to describe with OSI layers and more technical terminology.
The most frustrating part of this draft is that there is no reconsideration of universal service fees. The draft speaks to the purpose of universal service but does not specify what that purpose is. The FCC is not empowered to examine the need for these fees. The draft makes it very clear that the USF will be applied to voice over IP as well as traditional voice services upon which the fee is currently levied. VoIP services will be required to pay the USF regardless of the infrastructure on which their offerings ride., so cable operators are losing a competitive advantage they currently hold in the race to sign up VoIP customers.
Applying USF to VoIP is problematic, in that the FCC is going to be hard-pressed to measure the usage and assess fees associated with PC-to-PC VoIP services since these are not specifically excluded in the draft language. Its partly out of difficulty applying USF to PC-to-PC VoIP that I had hopped there might be a reconsideration of the USF. One possibility is for USF to be assessed at the facilities/infrastructure level rather than the service level. Short of having the notion of the need for universal service at least opened up for questioning by the FCC, I had hopped the bill might move away from making this assessment at an application layer. I think the application approach opens us up for confusion in the future as new technologies come to be.
There is no surprise that the bill specifies that VoIP providers will pay all 911 fees and have access to 911 facilities and services at non-discriminatory rates. There is a section of the draft that indicates the FCC should hold hearings on the feasibility of location-based services for VoIP. One of the things we might expect to see come out of these hearings is GPS or other location technologies finding their war into VoIP-enabled routers and handsets. VoIP providers are also expected to support local number portability fully.
Another thing I found very surprising is that the draft does not mention wireless services with any real specificity. I am surprised to see that broadband wireless technologies such as Wi-Max or even Wi-Fi are not mentioned by name. This seems to leave another significant hole in how legislation will address a broadband future that is just over the horizon.
I did not find anything that addressed the question of municipal networks. Considering the legislative activity at the state level on this topic I did expect a section of the bill to be devoted to that question.
The draft creates three sets of services and associated providers:
- BITS: any packet-based transmission service (specific exclusion of time division multiplexing services and their providers from this class)
- Broadband Video: the offering of video packages, voice and Internet services. Offerings such as Verizons FIOS would fall into this category
- VoIP service: Voice over Internet or other packetized platforms.
The draft doesnt really address existing telecommunications providers or cable providers or either of these groups existing services in any sufficient detail. I would have expected that the effort to create classifications of services and normalize regulation across both classes would have been served by language which specifically fit existing offerings into any of these newly-defined service classes. This is going to be an area for some shenanigans should this draft become law.
The draft includes language to specify that BITS, broadband video and VoIP providers must register with the FCC and state commissions. Particularly for VoIP providers I think this is going to be difficult to enforce, particularly those offering PC-to-PC VoIP.
One major change from the status quo is that the bill takes authority to approve franchises for video services away from local franchise authorities. If we ignore the question of the deployment of local facilities, this could let a hundred flowers of competitive video service bloom. Broadband video providers will still be required to pay franchise fees at non-discriminatory levels to those paid by franchised cable operators today, and all requirements levied against cable operators will also be levied against broadband video providers. There is nothing specific in the law as to whether or not cable providers are now freed from requirements to renew their franchises, and I cant help but wonder if we might not wee scenarios where cable companies overbuild in adjoining communities to compete directly with one another.
The draft bill does include significant language in several suggestions focusing on access to rights of way, utility poles and similar infrastructure for the deployment of new facilities. Interestingly electric utilities are accepted from providing non-discriminatory access to their facilities to BITS service providers. I find this extremely interesting as the power companies continue to look to broadband over power lines as a new technical offering. It looks like the draft is trying to carve out an area where electric utilities can develop and provision these services free from a need to open up their facilities to competition. In the short term I think this is a good idea, but in the long term Im not sure electric companies have the appropriate skill sets to manage Internet services. I hope theyre smart enough to partner with portal companies to handle all of the media elements of a broadband service.
The thwarting of local franchising aside, there is language in the draft which gives local authorities significant leeway to approve or reject infrastructure projects. I would suspect that cable companies and incumbent telcos will work to prevent new facility builds on the basis of damage or danger to local roads and infrastructure. Considering how long cable companies in particular have been required to have massive organizations to interface with franchise boards we can expect them to be plugged in at all the right levels to facilitate blockages to new competitors. This is a space to watch very carefully if there is ever to be viable facilities-based competition. On a related not, telecommunications carriers are still required to offer unbundled network elements and collocation to BITS providers. I have to wonder how recent SCOTUS decisions might impact this particular provision as it makes its way through Congress.
Despite language that hints at network neutrality, the bill makes allowances for providers to prioritize certain kinds of traffic. The concern here is that if any provider should prioritize certain traffic in such a way as to indirectly degrade the quality of certain other kinds of traffic or services and applications offered by specific, competing providers. This
could lead to a scenario where a cable company, operating as a broadband BITS provider, could apply a priority to all of their VoIP and other kinds of traffic in an effort to squeeze all of the capacity out of the local access networks to prevent adequate throughput for competing VoIP services.
There are many numerous requirements for consumer protection and prevention of fraudulent charges, including minimal allowances for sharing of customer details among providers for the provision and support of services such as BITS delivered over telephone infrastructure. Aggregate customer information which does not identify individual customers can be shared by providers, and must be done so on a non-discriminatory basis. VoIP providers are required to offer customer directories on a non-discriminatory basis, but I would not be surprised to see VoIP providers who do not offer directories at all in an effort to entice customers with a message of being able to avoid telemarketing calls.
Just as telephone companies today are required to provide the ability to block access to for-pay 1-900 numbers and the like, so will VoIP and BITS providers be required to offer customers the ability to block access to comparable services. For BITS providers in particular I think this is going to be very difficult. Would access to a subscription porn site qualify as a service comparable to a 1-900 number, or does the service only become comparable when the charges for the service can be applied specifically to a users bill for BITS services? In other words, does the charge for the offending service have to be of a class that can be included on a users bill, just as the charges for a 1-900 bill end up on the bill for phone services? I think this issue could use some clarification or perhaps I could use some education.
In a very interesting section of trying to make sure cable and local exchange telephone companies continue to offer services which compete with one another, there is a provision that indicates that a LEC cannot own more than ten percent of a cable company which has any operations that overlap with their own geographically. Likewise cable operators cannot purchase local exchange telephone companies. I have to wonder if this is really a good deal as I consider how this might have impacted mergers and acquisitions in an alternate universe where this law was in place and AT&T were trying to snap up cable assets to compete with the Bell companies in the late 1990s. In that alternate universe this provision could have created complications for that merger as well as the acquisition of that merged company by the likes of SBC. The purpose in thinking about alternate universes such as this is to consider what impact this provision might have on an industry which will go through many period of high flux. This provision will create issues for the industry down the road, and Im sure not all of those issues will be good for consumers.
So, thats my assessment. Overall I would grade the bill about a B-minus. It has the potential to do away with a lot of the barriers to facilities-based competition at the last mile, but it still leaves open significant opportunities for incumbents to prevent the introduction of that competition. The inability to bring a reconsideration of universal service fees is particularly disappointing, but I suppose its a fantasy that those fees would ever go away. Time will tell whether or not assessing these fees of all voice services will be harmless or no.
