Wheeler Wields Big Stick on Interconnection

FCC chairman Tom Weeler appeared at home among competitive telecom carriers given his "competition, competition, competition" mantra. In fact, he led a cheer to that effect during his keynote for the COMPTEL convention in Dallas Monday (Oct. 6) and advised telcos that IP interconnection is not an option.

He drew lots of applause when he threw his audience some red-meat lines about incumbent telecoms and competition, including: "[T]he exercise of uncontrolled last-mile power is not in the public interest"; "Let me be clear: transitions to IP are not a license to limit competition;" and "[W]hen we move to an all-IP environment, an incumbent’s refusal to interconnect in IP will be a crisis for consumers and workers..."

Incumbent telcos have been pushing the FCC not to "graft" legacy interconnection and other copper-based regs on a new fiber-based network world. But Wheeler has made it clear that protecting consumers access to vital services is a public interest goal and part of his "Network Compact."

"I hope that competitive providers and incumbents can reach interconnection agreements on reasonable terms on their own," he told his audience, "with a clear pathway established by the time that the technical standards are established,” which he said means in parallel. “But if a voluntary effort cannot resolve the issues and the public interest is not being served,” he warned, “then let there be no mistake: The FCC will act."

And Wheeler wasn't done: "Using uncertainty around VoIP interconnection to delay broadband deployment, slow the IP transition, and drive up costs for businesses and consumers is intolerable," he said.

But Wheeler also recognized the need to transition from old copper to new fiber, so long as consumers and competitive carriers were not adversely affected.

"Where copper is being taken offline, should competitors have the opportunity to buy the copper so that a valuable resource is not wasted," he said. "And where copper is not being retired, how do we ensure that it is being maintained adequately? I intend to propose a series of measures to address these and related issues, while ensuring that incumbents and competitive providers alike are not held back in fiber deployment. Our goal should be to improve our copper retirement process to strengthen our core values, including competition."

Wheeler said the FCC would be wading into special access services (business broadband) in 2015 after it finishes its data collection from ISPs, including cable operators. In the meantime, he said, the FCC isn't just waiting around.

Wheeler has charged the Wireline Competition Bureau to recommend ways to "alleviate the impact" of such contracts, though he did not specify what those might be.

He said he had heard the complaints about large-volume and term commitments in existing contracts—incumbent carriers like AT&T and Verizon are required to make their special access lines available to competitors on reasonable terms and conditions.

Those complaints include "uncertainty, unreasonably raising costs, and delaying the transition to IP" for customers of COMPTEL members.

Not surprisingly, COMPTEL was pleased with the speech. COMPTEL CEO Chip Pickering introduced Wheeler as more focused on competition policy than anyone since the 1996 Telecom Act rewrite. He called Wheeler the right person for the job at the right time. And that was before the speech.

Afterwards, Pickering pointed specifically to the special access contracts issue, and to interconnection, which he called "a fundamental component" of competition.

Public Knowledge was praising Wheeler as well on the special access issue.

“For too long, special access and other pro-competitive actions at the FCC have remained stalled," said Jodie Griffin, senior staff attorney at Public Knowledge. "We welcome Chairman Wheeler's recognition that the FCC needs to take action to promote competition, not merely hope that competition springs up in the face of hostile incumbents. We commend Chairman Wheeler for continuing to make small businesses, consumers, and competition a priority."

In a 3-2 party line vote in August 2012, the FCC suspended its benchmarks for deregulating the rates of special access services so it could better determine where there is competition for that service. In December 2012, the commission proposed the new data collection effort.

Under FCC rules, telcos are required to lease special access lines to competitors, like cable operators. But the FCC deregulated AT&T and others' special access lines in 2009 in cases where competitive triggers are met.

Those lines are the "last mile" dedicated broadband lines to businesses, which incumbent local exchange carriers like AT&T dominate. By contrast, residential customers can generally choose from cable or phone lines for their service.

The commission more than a dozen years ago removed "dominant pricing" regulations, while continuing to regulate interconnection and reasonable pricing per its Title II common carrier regulation of Independent Local Exchange Carriers (ILECs). Ever since, the commission has been under pressure from public interest groups to re-regulate special access.

USTelecom, which represents incumbents, had only good things to say about the speech, commenting on the chairman's recognition of the importance of the IP transition and his focus on "forward-thinking" policies.

“We appreciate the acknowledgment of the importance of the on-going IP transition for our entire economy," said USTELECOM President Walter McCormick. "Technological change and massive investment throughout the sector has created multiple broadband paths for consumers and businesses to connect and communicate. The chairman’s recognition that these changes have led to more competition, and his focus on developing policies for tomorrow – in a world where cable, wireless, wireline, satellite and over-the-top providers are offering unprecedented choice in products and services to residential consumers and businesses alike – is essential to a healthy Internet ecosystem. The chairman’s encouragement of commercial negotiations, and his focus on gathering market data before imposing regulation, are concepts that we agree with and endorse.” 

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.