Before the Federal Communications Commission Washington, D.C

Transcription

1 Before the Federal Communications Commission Washington, D.C In the Matter of ) GN Docket No Technology Transitions ) COMMENTS OF MARASHLIAN & DONAHUE, LLC IN SUPPORT OF THE APPLICATION OF IOWA NETWORK SERVICES, INC. FOR AUTHORITY TO CONDUCT A SERVICE-BASED EXPERIMENT CONCERNING THE TDM-TO-IP TRANSITION FOR CENTRALIZED EQUAL ACCESS SERVICE Dated: March 19, 2014 Robert H. Jackson MARASHLIAN & DONAHUE, LLC 1420 Spring Hill Dr., Suite 401 McLean, VA Tel: Fax:

2 TABLE OF CONTENTS I. Introduction and Summary... 3 II. Description of the INS Experiment... 4 III. The Dearth of Similar Service Trial Applications from Other Rural and Small Carriers Demonstrates Serious Problems with The Commission s Intercarrier Compensation Transition and Is Putting the Public Interest at Risk... 6 a) New Technology Carries a Risk of Failure that, in Turn, Can Put Communications at Risk... 6 b) The FCC s Phase-out of Intercarrier Compensation Has Prevented Robust Participation by Small and Rural Carriers in the IP Trials and, as Such, Increased the Likelihood of Catastrophic Network Failure IV. Conclusion March 19, 2014 Page 2

3 I. INTRODUCTION AND SUMMARY On January 31, 2014, the Federal Communications Commission ( FCC or Commission ) adopted a framework for granting carriers authority to conduct service-based experiments concerning a transition of the U.S. telecommunications network from circuited switched time division multiplexing ( TDM ) - to-internet Protocol ( IP ). 1 In response thereto, Iowa Network Services ( INS ) filed an application for a service trial on February 20, 2014, proposing to evolve its Centralized Equal Access ( CEA ) network from TDM to IP. Marashlian & Donahue, LLC ( M&D ) 2 hereby files comments in support of the INS application. INS has more than justified its proposed IP service trial as being in the public interest. The Commission should, therefore, promptly grant the application. M&D also explains how the dearth of similar service trial applications from other rural and small carriers effectively demonstrates serious problems with the FCC s phase-out of intercarrier compensation. The total phase-out and manner in which it is occurring, rather than the reform of existing intercarrier compensation that results in fair and cost-related compensation, acceptable to all stakeholders, has seemingly discouraged carriers from participating in similar trials. This, in turn, puts the nation s communications network and the public interest at risk. Recent history of major network upgrades demonstrates network modifications regularly have glitches that result in network failures and serious problems for consumers and public safety. A conversion of the entire network from TDM to IP, without the benefit of widespread trials and testing, will most certainly result in similar outages, which could be catastrophic in nature. 1 Technology Transitions, Order, Report & Order and Further Notice of Proposed Rulemaking, Report & Order, Order and Further Notice of Proposed Rulemaking, Proposal for Ongoing Data Initiative, GN Docket No. 13-5, FCC 14-5 (rel. Jan. 31, 2014) ( Technology Transitions Order ). 2 Marashlian & Donahue, LLC is a full service Washington, D.C.-area law firm serving the comprehensive legal needs of the communications industry. Many of its clients are smaller service providers, including a considerable number operating outside large metropolitan areas. March 19, 2014 Page 3

4 The risks for network and service catastrophes could be lessened with additional service trials, especially by small and rural carriers. The Commission should provide such carriers, including CLECs and interconnected VoIP providers, with additional incentive to participate in trials by granting them specific permission to recover their operating, but not capital, costs for IP service trials in interstate access charges, as explained below. It is quite likely that smaller participants cannot afford to absorb additional operating costs in existing budgets, absent some temporary relief from the Commission. II. DESCRIPTION OF THE INS EXPERIMENT INS spends several pages of its application explaining INS s history, network and culture of innovation in rural Iowa. It is safe to conclude that, but for INS s investments in innovative technology and facilities, telecommunications and information services in rural Iowa would not be as robust as they are today. INS and its partner rural local exchange carriers ( RLECs ) have brought state-of-the-art telecommunications services, such as VOIP, ISDN, ATM/frame relay services, host/remote switching, alarm monitoring and network management services, video conferencing, video transport, broadband Internet services, and special access 3 to small towns and farms throughout the state. Such investment creates a better quality of life and stronger base for economic development. This serves the public interest. The INS application proposes a conversion of INS s network from circuit-switched TDM to IP, with the goal of exploring whether IP CEA can economically advance and accelerate IP conversion for the more than 140 rural LECs currently connected to INS' centralized platform. 4 INS further proposes to work with other carriers and service providers on a voluntary basis and 3 INS Application, at 3. 4 Id., at 4. March 19, 2014 Page 4

5 make periodic quality of service reports. 5 The experiment will test the quality of older services (such as 1+ dialing) and newer ones provisioned over the next generation network. The INS trial is scheduled for three phases: 1) conversion of INS s two tandem switches to IP technology; 2) conversion of the connections between other carrier s points of interconnection and INS s subtending LEC s switches to IP transport; and 3) the conversion of the last mile of the connection between LEC s switches and end users. The final phase would eliminate all conversions of traffic between TDM and IP protocols. 6 The trial would operate with volunteers. In other words, other carriers and service providers could continue to use INS s TDM network during the trial, but would be encouraged to test their operations over IP technology. INS proposes to protect 911 emergency calling, both existing and next generation ; communications for national security, emergency preparedness, and public safety operations ; as well as provide for the general protection of network security and other important public interest considerations. 7 It is clear from the face of INS s application alone that the Carrier is proposing a sound and controlled experiment to test the conversion of a critical and successful TDM-based network to an IP-based one. For this reason alone, the FCC should promptly approve the application. But as good as INS s trial is, it cannot alone provide all necessary testing and experimentation for the entire rural communications market or the broader TDM network. 5 Id., at Id., at Id., at 9, et seq. March 19, 2014 Page 5

6 III. THE DEARTH OF SIMILAR SERVICE TRIAL APPLICATIONS FROM OTHER RURAL AND SMALL CARRIERS DEMONSTRATES SERIOUS PROBLEMS WITH THE COMMISSION S INTERCARRIER COMPENSATION TRANSITION AND IS PUTTING THE PUBLIC INTEREST AT RISK While many small and rural carriers are seeking Connect America Fund ( CAF ) money for the extension of broadband, no other carriers, except for INS and the gigantic AT&T, 8 have proposed any service-based experiments. While there may be additional service-experiments proposed, it is very unlikely that small and rural carriers will make applications. Most simply cannot afford to test IP technology and, as such will effectively move from TDM to IP on blind faith and the results of other service trials, which may or may not have identified the risks particular to all small or rural carriers. This is a dangerous result that will likely put the public interest at risk. Moreover, it seems likely that intercarrier compensation reform concerns have fostered, at least to some degree, the lack of participation by small and rural carriers in servicebased trials. We are not arguing herein for any particular form of intercarrier compensation, such as per-minute rates, or that carriers should be prohibited from agreeing to Bill and Keep ( B&K ). Rather, we suggest that certain gaps in the revised intercarrier compensation regime have acted as a disincentive to conducting or participating in trials. a) New Technology Carries a Risk of Failure that, in Turn, Can Put Communications at Risk Slightly more than 20 years ago, the telecommunications industry rolled out Signaling System 7 ( SS7 ) technology on a national basis. In-band MF signaling was replaced with outof-band signaling controlled by a computer database. SS7 brought with it, not only more efficient use of the network (as call circuits were not set up unless and until the separate SS7 data network indicated the called party s phone line was available), but also brought consumers 8 Commission Seeks Comment on AT&T S Proposal for Service-Based Technology Transitions Experiments, Public Notice, GN Docket Nos and 13-5, DA (rel. Feb. 28, 2014). March 19, 2014 Page 6

7 access to new signaling-based services including, intelligent call routing, number translation, local number portability, prepaid billing mechanisms, and short message service ( SMS ). However, the transition from multi-frequency ( MF ) signaling to SS7 signaling did not always flow easily. In the early 1990s, there was a spate of SS7 outages that cascaded throughout large portions of the country, much like a massive failure of regional electric grids the nation has seen from time to time. Due to SS7 failures, customers were without service for long periods of time; communities were isolated; the FAA s airplane control system was put at risk; and public safety agencies were often inaccessible to citizens unless 911 emergency calling services remained on MF signaling. 9 In Maryland alone, some 5 million people were without telephone service for an entire day (June 26, 1991) because of an SS7 failure. 10 The FCC, state PUCs, and Congress investigated the network failures, along with private industry. Engineers found that many of the outages and network failures were caused by a software error. Internal maintenance messages that the SS7 computers sent to themselves to indicate the computer was working properly overloaded the computing capacity. Also, since the internal messages could not be ignored because of the parameters of the operating systems, some SS7 networks crashed. As a consequence (and since all signaling was controlled by the SS7 networks), customers were unable to make phone calls. Because of the risk to public 9 Amendment of Part 63 of the Commission's Rules to Provide for Notification by Common Carriers of Service Disruptions, Notice of Proposed Rulemaking, 6 FCC Rcd 5531 (1991). In January of 1990, for example, AT&T experienced a large scale service failure when software used with its Signalling-System 7 (SS7) network contained a coding error. Other major interexchange carriers also have experienced outages associated with the introduction of SS7. In June and July of this year, local exchange carriers Pacific Bell and Bell Atlantic also experienced major outages. Id., at March 19, 2014 Page 7

8 safety posed by SS7 failures, the Industry generally left the 911 emergency calling network on the less-efficient MF signaling protocol or, if already converted, returned to MF signaling. 11 The Maryland outage was not unique. As the FCC explained in 1991, In January of 1990, for example, AT& T experienced a large scale service failure when software used with its Signalling-System 7 (SS7) network contained a coding error. Other major interexchange carriers also have experienced outages associated with the introduction of SS7. In June and July of this year, local exchange carriers Pacific Bell and Bell Atlantic also experienced major outages. 12 The January 1990 AT&T outage resulted in more than 65 million blocked call attempts. 13 The Pacific Bell and Bell Atlantic SS7 failures together accounted for more than 30 million blocked call attempts. The FCC categorized these incidents as catastrophic. 14 Similarly, other technological advances in telephony have involved substantial network failures. 15 One example is local number portability ( LNP ) for wireless phones. Wireless LNP allowed landline customers to switch their telephone number from one wireless carrier to another without a number change or to a wireless phone and vice versa. Wireless LNP constituted an important step towards vigorous local competition. Yet, during the roll-out of wireless LNP, there were many network failures. Some consumers were ported to the wrong 11 See generally, Bell Atlantic, Conversion of Signaling on E911 Trunks Between End Office and E911 Tandem from Multi Frequency to SS7, Network Disclosure, available online at 12 Amendment of Part 63 of the Commission's Rules to Provide for Notification by Common Carriers of Service Disruptions, Notice of Proposed Rulemaking, 6 FCC Rcd 5531, at 2 (1991). 13 Amendment of Part 63 of the Commission's Rules to Provide for Notification by Common Carriers of Service Disruptions, Memorandum Opinion & Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd 8517, at 12, n.15 (1993). 14 Id. 15 Carrier and Commission concern about network failures with the introduction of Local Number Portability for wireline services caused the FCC to extend the deployment date for the first phase of deployment by three months and the second phase by 45 days. Telephone Number Portability, First Memorandum Opinion & Order on Reconsideration, 12 FCC Rcd 7236, at (1997). March 19, 2014 Page 8

9 carrier and others simply lost their cellular service altogether. 16 A key cause of the failed ports was simple mismatched data. 17 The FCC was also extremely concerned about network failures during the opening of the 888 Service Access Code ( SAC ) and took an active role in overseeing the entire process. In addition, to hasten 888 implementation, the [Common Carrier] Bureau has continued to conduct biweekly industry meetings to address the deployment of the software and hardware upgrades needed to support portable 888 toll free numbers. The purpose of these meetings is to provide an open forum in which the industry and the general public can share information regarding the implementation of the new toll free code. The first meeting was held on June 15, 1995; biweekly meetings are scheduled to be held until the 888 code is introduced. 18 In sum, the introduction of new technology in communications brings with it not only great promise of better and enhanced services, but also the risk of network failure and, in turn, substantial harm to the public. It is critical to test technology vigorously and widely in order to protect against possible catastrophic failure. As such, INS should be commended for its willingness to conduct a controlled trial of its conversion to an all IP network. But at the same time, the reluctance of other rural and small carriers to participate in similar trials may well indicate that many smaller service providers perceive the FCC s intercarrier compensation phase-out plan to constitute a strong economic disincentive for them not to incur the additional costs for participating in IP service trials. 16 New Jersey Division of The Ratepayer Advocate, National Roll Out of Local Number Portability: What Consumers Need To Know: Frequently Asked Questions, available online at 17 Id. Other LNP-related errors cause misrouted calls. See, e.g., ATIS, Network Interconnection Interoperability Forum, Guidelines for Reporting Local Number Portability Troubles in a Multiple Service Provider Environment, ATIS (2006). 18 Toll Free Service Access Codes, Notice of Proposed Rulemaking, 10 FCC Rcd 13692, at 9 (1995). March 19, 2014 Page 9

10 b) The FCC s Phase-out of Intercarrier Compensation Has Prevented Robust Participation by Small and Rural Carriers in the IP Trials and, as Such, Increased the Likelihood of Catastrophic Network Failure In November 2011, the FCC adopted new rules that scrapped decades of precedent under which carriers compensated each other for the use of their networks under most circumstances. The Commission s new rules phase out carrier access charges (for interexchange traffic) and reciprocal compensation (for local traffic) in favor of mandatory B&K, 19 supplemented, in part, by an expanded and retargeted Universal Service Fund ( USF ) program. 20 The Commission called intercarrier compensation outdated, and riddled with inefficiencies and opportunities for wasteful arbitrage. 21 As of July 1, 2020, all intercarrier compensation will be reduced to B&K in other words, to nothing. 22 Every carrier must allow every other carrier to use the former s network essentially free of charge and rely on its end user customers to pay higher rates for service. It seems, however, that mandatory B&K in all situations, irrespective of an individual carrier s costs and traffic patterns is causing financial problems for many small and rural carriers. 19 In 1996, the FCC rejected arguments calling for mandatory B&K for several reasons, including its finding that carrier costs for terminating traffic were not de minimus and not economically efficient. Thus, the FCC decided, that states may impose bill-and-keep arrangements if traffic is roughly balanced in the two directions and neither carrier has rebutted the presumption of symmetrical rates. Local Competition Provisions of the 1996 Telecommunications Act, First Report & Order, 11 FCC Rcd 15499, at 1112 (1996) (subsequent history omitted). While the Commission allowed states considerable flexibility in using or not using B&K, the linchpin for its application was still roughly balanced terminating traffic volumes. Id., at Connect America Fund, Report & Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd (2011) ( Connect America Fund Order ), appeal pending sub nom. In Re: FCC , No (10 th Cir.). 21 Connect America Fund Order, at 9. The Commission effectively found the many flaws with mandatory B&K absent roughly balanced traffic to have vanished by November Id., at Id., at Figure 9. What the FCC does not seem to understand is that, a price of zero in every circumstance and irrespective of the facts, including carrier costs and traffic patterns, also invites uneconomic behavior. A larger carrier will most certainly find ways to drop traffic on other carriers to avoid incurring costs on the former s networks with B&K, most especially since the FCC does not permit call blocking. Further, there can be economic incentives for scofflaws to send free robocalls to consumers. March 19, 2014 Page 10

11 Lenders to rural carriers have warned as long ago as 2004 that FCC reforms that would eliminate access charges could be frightening to lenders that finance rural carriers network improvements, according to CoBank, a federally sponsored lending institution that boasts $3 billion in outstanding loans to rural carriers. 23 Similarly, the 2013 survey of NTCA member companies (34% of members responding) showed 69% canceled or postponed fixed network upgrades as a result of the uncertainty surrounding the Commission s ongoing universal service fund (USF)/intercarrier compensation (ICC) reform efforts. 24 The total aggregate value of those projects was $492.7 million. 25 There is strong empirical evidence that the phase-out of intercarrier compensation has been an enormous drag on rural investment in new technology. M&D is not filing comments to reopen the debate on intercarrier compensation and USF reform. But we do submit that these rule changes, which are favored by some of the biggest service providers (e.g., AT&T and Verizon) and opposed by many small providers, are most likely causing postponed or canceled network projects, including the transition from TDM to IP networks, and also discouraging participation in the IP service trials. That discouragement, in turn, will result in the untested, blind faith deployment of IP technology by the vast majority of service providers. And, as recent history shown us, the deployment of new technology can result in network failures, which, in turn, puts the vibrancy and availability of communications services to the public at risk, as well as public safety and even national security. We saw how 23 Connected Planet, Rural lender sounds warning on bill-and-keep proposals, March 24, 2004, available online at See also, Letter from Robert West, CoBank, to Marlene Dortch, FCC, filed in CC Docket No (Sept. 20, 2008) CoBank is concerned that proposals like the AT&T and Verizon on terminating access rate [which would have only reduced intercarrier compensation to $ per minute] do not address the operating characteristics of rural ILECs. The AT&T and Verizon proposal on terminating acces rate will make it difficult for rural ILECs to provide rural consumers with a full array of affordable and advanced communications services, comparable to price and quality to those offered in urban areas. Id., at NTCA, Survey: FCC USF/ICC Impacts Summary of Results, 2013, available online at ey.pdf 25 Id. March 19, 2014 Page 11

12 the mere change from in-band MF signaling to out-of-band SS7 signaling caused, in the words of the FCC, catastrophic outages. These catastrophes occurred even though the SS7 changeover had been heavily tested. What catastrophes will a largely untested replacement of the entire telecommunications network cause in rural markets? Nor can the FCC limit this problem to rural markets. Many small carriers and service providers operate in urban and suburban markets throughout the country. As the FCC s intercarrier compensation rules apply both nationally and preemptively, these CLECs and interconnected VoIP providers must build or lease their networks with the knowledge that other carriers, including AT&T, Sprint, and Verizon, will get free use thereof. That is affecting their investment and management decisions as well. Even smaller carriers that support B&K as an end goal need to worry whether the biggest carriers will manipulate B&K to the small carriers financial disadvantage by dumping costly traffic on them or whether scofflaws will inundate end users with robocalls. Non-rural, but small, service providers are a critical part of American communications, most especially as VoIP usage continues to grow dramatically. Yet, most VoIP calls continue to have a TDM component. We do not know how VoIP calling on a completely IP network will function for every type of service provider. There are some carriers that have only limited experience with VoIP, even as others are expert. Yet in the face of this lack of knowledge, these small service providers are not proposing IP service trials. They too are entering into the new world without testing. As such, the Commission must expect small service providers in larger markets will experience outages and network failures. The Commission must take some important steps immediately. M&D makes reasonable recommendations below. March 19, 2014 Page 12

13 a. The FCC Should Immediately Grant Carriers Permission to Recover Their Costs for Participating in IP Service Trials and Extend the Time for Their Initiation The complete phase-out of intercarrier compensation, as adopted by the FCC, is clearly contributing to the decline in network investment by smaller and rural carriers. More significantly to the instant proceeding, it is most likely discouraging any interest by those same carriers in participating in IP service trials. M&D have already explained the dangers of insufficient IP experiments and urge the FCC to take actions that will provide incentives for participation, irrespective of where intercarrier compensation reform finally ends. First, the FCC should announce it will give small carriers and other service providers an additional six months in which to request authority to engage in an IP service trial. For incumbent LECs, the FCC should allow them to recover the operating costs of any IP service trial in interstate rates. (Capital costs should not be so recovered.) Incumbent LECs that file their own interstate access tariffs should be permitted to calculate a revenue requirement for IP service trial operating costs and recover those costs in higher interstate access charge rates in any reasonable manner. 26 Incumbent LECs that participate in NECA pools should recover their participation costs from such pools. Cost estimates should be provided to NECA by cost companies. NECA should estimate industry costs for average schedule companies. NECA should be directed to add those costs to its pool revenue requirements and adjust access charges accordingly. Participating carriers should recover the costs in increased settlements from NECA. 26 The FCC has recognized the occurrence of special network costs can justify a new rate or rate element. For example, the Commission proposed and adopted a rule change that would allow LECs to recover their costs for providing equal access in an optional new rate element. MTS and WATS Market Structure Notice of Proposed Rulemaking, 2 FCC Rcd 254 (1987); Report & Order, 4 FCC Rcd 2104 (1989). Similarly, the FCC rejected long distance carrier arguments against the equal access charge that recovered costs on a per-presubscribed line basis. The Mountain States Tel. & Tel. Co.; Northwestern Bell Tel. Co.; and Pacific Northwest Bell Tel. Co., Tariff F.C.C. No 1, Memorandum Opinion & Order, 2 FCC Rcd 7471 (1987). March 19, 2014 Page 13

14 CLECs that decide to participate in IP service trials should be able to recover their operating costs in higher interstate access charges as well. For the sake of simplicity, CLECs should be able to increase their access charges by the amount for NECA s comparable rate increase. For example, if NECA were to increase a pool rate for local switching by $0.003 per minute to recover higher revenue requirements for those incumbent LECs participating in IP service trials, any CLEC with interstate access tariffs, which also participates in an IP service trial, should be able to increase its rate for local switching by $0.003 per minute. Alternatively, the FCC might consider authorizing cost recovery through a new, temporary rate element or surcharge. Once a LEC has completed an IP trial under the parameters of the Technology Transitions Order and any specific order approving the LEC s trial, it should stop billing the higher access charge rates. NECA should also make appropriate changes to its pool rates and settlements. Alternatively, the FCC could set a date certain by which all trials must be completed and access charges/pool settlements reduced for all participating LECs. Of course, LECs that do not participate in any IP service trial should not be permitted to raise their access charges to recover any trial costs. Further, the FCC should also direct IXCs, wireless carriers and others paying access charges are expected to pay the higher rates, which, in turn, can be passed along to their customers. 27 Of course, any LEC participating in an IP service trial that has raised its interstate 27 As the FCC is well aware, a number of larger carriers are disputing and refusing to pay intercarrier compensation bills, not because of legitimate billing errors and claims, but rather, as part of a strategy to cut costs through what is effectively stealing from LECs. The most infamous case is Central Tel. Co. of Virginia v. Sprint, 715 F.3d 501 (4th Cir.), cert. denied, U.S. (2013). In that case, the Fourth Circuit affirmed a finding that Sprint attempted to reduce operating costs by challenging intercarrier compensation bills of the type it had regularly paid before to LECs in order to improve Sprint s bottom line. March 19, 2014 Page 14

15 rates to recover its operating costs for such trial must also impute those higher rates to its retail rates for interstate services and recover them from its consumers. 28 IV. CONCLUSION For the reasons discussed above, the FCC should provide additional time (i.e., six months) for carriers and other service providers to proposal service-based IP trials; allow such participants to recover their operating, but not capital costs for such trials from interstate access charges; and direct IXCs, wireless carriers and other carrier are expected to pay the higher rates during the period of such trials. Respectfully submitted, Robert H. Jackson Marashlian & Donahue, LLC The CommLaw Group 1420 Spring Hill Road Suite 401 McLean, Virginia Tel: (703) Fax: (703) March 19, The Commission has a long history of requiring LECs to impute their access charges to their retail services to preserve a level playing field with other carriers. See, e.g., Policies & Rules for Dominant Carriers, Second Report & Order, 5 FCC Rcd 6786, at 174 (1976). March 19, 2014 Page 15

16 CERTIFICATE OF SERVICE I, Robert H. Jackson, hereby certify that on this 19th day of March, 2014 a true copy of Comments of Marashlian & Donahue, LLC In Support of the Application of Iowa Network Services, Inc. for Authority to Conduct a Service-Based Experiment Concerning the TDM-TO-IP Transition for Centralized Equal Access Service, was filed via FCC ECFS in GN Docket No and was served upon the following via James U. Troup troup@hhlaw.com Counsel for Iowa Network Services Robert H. Jackson Marashlian & Donahue, LLC The CommLaw Group 1420 Spring Hill Road Suite 401 McLean, Virginia Tel: (703) Fax: (703) rhj@commlawgroup.com March 19, 2014 Page 16