AT&T, Verizon execs cite 'chilling' effect of murky TDM-to-IP transition regs

WASHINGTON, D.C.--AT&T (NYSE: T) and Verizon (NYSE: VZ) envision a blended wireless and wireline service world, but regulatory executives from both telcos said during a policy keynote session at the TIA 2013 tradeshow that a lack of regulatory clarity in transitioning their legacy TDM networks to IP is a key barrier.

James Cicconi, AT&T Craig Silliman, Verizon

From left, Cicconi and Silliman (Images courtesy AT&T & Verizon)

"In 2009, the FCC set some very ambitious objectives, one of which was a complete shutdown of the TDM architecture and merge to IP by 2017," said James W. Cicconi, senior executive vice president of external and legislative affairs for AT&T. "We're here in 2013 and not a single thing that I can discern has been done to advance that objective."

Cicconi said that he has gotten little, if any, guidance from the FCC on the next step.

And Craig Silliman, senior vice president of public policy for Verizon, said that while the telco has  benefited from a "light touch" regulatory approach for advancing its wireless business, legacy voice service regulations have hindered its wireline moves.

Their comments come amidst the second week of a U.S. government shutdown that some analysts say could impact the FCC and other agencies' agendas on technology policy. Interestingly, a number of key regulatory leaders including acting FCC Chairwoman Mignon Clyburn cancelled their appearance at TIA 2013. 

Unlike their deployments of wireless 4G LTE and the cable industry's move to DOCSIS 3.0, Verizon and AT&T have to get the FCC's permission to make changes to their legacy networks.

The FCC aims to shut down the TDM network by 2017. But AT&T, for one, previously announced it plans to turn off its TDM network by 2020. 

In November 2012, the FCC issued a public notice proposing TDM to IP trials and sought comments. These trials were focused on examining the impact of IP transition areas like next-generation 911, transitioning consumers from wireline to wireless services, and interconnection of VoIP traffic that's provided by incumbents and competitive providers.

At that time, AT&T filed a petition to conduct TDM to IP trials on two of its 4,500 wire centers.

"We're sitting here a year later and somehow the FCC can't get its mind around the concept of experimenting toward an objective they themselves set," Cicconi said. "We've got some work to do in advancing this and I think it requires not just a modernization of regulations, but also a modernization of mindset at the agency to accept and recognize the changes that need to take place."

Silliman said that Verizon's wireline plans have been hindered by legacy voice regulations.

He cites how Google Fiber (Nasdaq: GOOG) nixed voice from its 1 Gbps FTTH service bundle in Kansas City because it would be subject to regulatory scrutiny.

"If you look at the example of when Google built fiber and decided they did not want to offer voice services, which are just an app, because they did not want to get entangled with the regulatory regime," Silliman said. "That should be a wakeup call to policy makers all over the country."

Silliman added that the regulatory restrictions of TDM-based voice could prevent other service providers from developing blended wireless and wireline services. 

"How many decisions are being made every day in companies around the country that say 'I could innovate on this fixed wireless/wireline convergence product, but it would mean we would have to adhere to fixed communications wireline carrier regulations?'" he said. "That has a huge chilling effect on investments so the real answer is how can you actually recognize the market and not having to micromanage that technology change?"

The telcos' frustrations are echoed in an Internet Innovation Alliance report that says the federal government should remove outdated regulations that require telcos to maintain traditional switched copper networks.

Both AT&T and Verizon agreed that in addition to technology transition, the FCC should be flexible in its policy approach.

Cicconi said that while regulations are necessary, the FCC needs to align its rules with the issues service providers face today.

"I think we can all agree with what the president said, 'we want smart regulation, not dumb regulation,' but what we're facing now are regulations designed for a very different set of problems," he said. "The challenge for government is to rethink its mission from time to time and to modernize or update its approach."

Cicconi added that the FCC realigned its methods to deal with new competition when it passed the 1996 Telecom Act.

Silliman agreed that regulations should encourage competition and innovation.

"The vendor community benefits from a world in which there are many suppliers and lots of competition, but what you want is this innovative system where there are lots of companies out there," he said. "This is the type of environment where you have a light touch regulatory environment, lower barrier to entry, and lots of people competing."

He added that an "uncertain regulatory environment where you don't know you will be able to get a return on your investment because of regulatory overhang will chill investment, and that's not good for the vendor community." 

Related articles:
IP technology transition trials proposed by FCC met with mixed response
TIA backs AT&T's FCC proposal for TDM-to-IP trials
Taking care of consumers in an IP world
TIA 2013: Discovering the silver lining in the TDM-to-IP transition

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