NTCA asks FCC to tread carefully with TDM-to-IP transition regulations

Calls for regulatory certainty, economic incentives
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The National Telecommunications Cooperative Association (NTCA) on Monday petitioned the FCC to take a careful look at how the ongoing TDM-to-IP transition will affect smaller independent telcos.

NTCA asked the regulator to provide clarity and support the migration from tradition TDM (time-division multiplexing) to IP (Internet protocol)-based networks with what it calls "targeted, thoughtful regulatory relief" and giving service providers economic incentives to deploy and maintain IP-based networks.

These near-term incentives would include policies that would provide two benefits: drive more IP interconnection by allowing service provider to recover costs for carrying traffic on their networks; and enable universal service support for broadband-capable, IP-enabled networks.

In its petition, the advocacy group said the FCC shouldn't take a "sledgehammer" approach in reforming regulations that support both TDM and IP-based services, but rather take into account consumer protection, competition and universal service in addition to recognizing the evolving nature of technology.

But this plan shouldn't be just a far-off concept held hostage in Washington D.C. To carry out any regulatory reforms, the FCC would coordinate with state regulators to develop solutions that would also include provisions for consumer protection, promoting competition, and ensuring universal service.

"It is essential to take a surgical look at regulations as technologies and markets evolve—but it is just as important that we maintain a clearly defined and sensible regulatory framework that above all else protects consumers and promotes universal service," said NTCA Senior Vice President of Policy Michael Romano in a release about the petition.

Just as the NTCA advocates for more regulatory clarity on the TDM-to-IP evolution, a growing number of traditional large and smaller independent ILECs are continually transitioning from plain old telephone providers to companies where broadband and IP-based technology is creating new revenue streams.

At the top are CenturyLink (NYSE: CTL) and Windstream (Nasdaq: WIN), two providers that indeed have a large legacy TDM base that will need to be maintained as they make their transitions to IP. The two mainly-rural telcos have been expanding their residential, but more importantly their respective business service sets via targeted acquisitions.

CenturyLink became a global player of cloud and data center services when it purchased Qwest and later, Savvis. Meanwhile, Windstream made a number of small acquisitions to bolster its wholesale and business services capabilities, purchasing KDL, Hosted Solutions and PAETEC.

By making these moves, CenturyLink and Windstream can now more effectively compete with larger telcos such as Verizon (NYSE: VZ) and AT&T (NYSE: T), two telcos that have traditionally dominated domestic and international business markets

But this is not just for the large independents alone. WVT Communications (NYSE MKT: WVT), while not abandoning its rural telephone base, has been making a name for itself in the unified communications (UC) and cloud space by purchasing USA Datanet and Alteva. In Q3, Warwick reported that UC service revenues grew 38 percent to $3.6 million, up from $2.6 million in Q3 2011.

However compelling these examples are, there is still a large population of much smaller telcos that may not have the financial clout to get this transition made will need a regulatory environment that can assist them and not drive them to make flash cut decisions.

For more:
- see the release

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