STATE OF MAINE PUBLIC UTILITIES COMMISSION ) ) ) ) ) ) COMCAST PHONE OF MAINE, LLC PETITION FOR RECONSIDERATION

STATE OF MAINE PUBLIC UTILITIES COMMISSION Public Utilities Commission Investigation into Whether Providers of Time Warner Digital Phone Service and Comcast Digital Voice Service Must Obtain a Certificate of Public Convenience and Necessity to Offer Telephone Service Docket No. 2008-421 COMCAST PHONE OF MAINE, LLC PETITION FOR RECONSIDERATION Pursuant to Section 1004 of the Commission s Rules of Practice and Procedure (5-407 C.M.R. 110, Comcast Phone of Maine, LLC ( Comcast Phone, on behalf of itself and its affiliates, including Comcast IP Phone, II, LLC ( Comcast IP (collectively Comcast, respectfully submit this Petition for Reconsideration of the Commission s October 27, 2010 Order in this proceeding. INTRODUCTION Public comments are the heart of the public s ability to participate in the administrative process. Under the Maine Administrative Procedure Act, rulemaking agencies must consider and respond to all significant public comments. That is particularly the case when the commenting party is a principal focus of the proceeding. Here, the Commission ignored indeed, in many cases, did not even acknowledge the Exceptions that Comcast submitted in response to the Hearing Examiners Supplemental Report (Comcast s Supplemental Exceptions. In addition, and in large part as a result of this procedural error, the Order reached the erroneous conclusion that Comcast s Digital Voice ( CDV interconnected voice over Internet protocol ( VoIP service is a telecommunications service and subject to state public utility regulation. Because of these errors, the Commission should rescind the Order and reinstate the status quo, in which providers of interconnected VoIP services are exempt from

Commission regulation, or instruct staff to issue a revised Examiners Report that addresses Comcast s arguments. At a minimum, the Commission should analyze the policy and consumer welfare implications of departing from the current, deregulatory framework for VoIP services in Maine before regulating CDV. The Commission should follow the approach of the Vermont Public Service Board, which has bifurcated its investigation into the appropriate regulatory treatment of interconnected VoIP services into separate phases. Only after determining that it had jurisdiction in the first phase does the Board plan to examine the policy wisdom of applying that state s telephone service regulations to VoIP in the second. 1 Comcast urges this Commission to do likewise. BACKGROUND & STANDARD OF REVIEW The Order represents the third attempt by the Commission and its staff to justify the imposition of public utility regulation on CDV. The first, the May 18, 2010 Hearing Examiner s Report (the Initial Report, concluded, (1 that CDV qualifies as a telephone service under Maine law, and (2 that it was unnecessary to consider Comcast s preemption arguments because Comcast can determine the physical end-points of CDV calls. Finding that it was possible to separately identify and regulate the intrastate portion of CDV without having to consider any countervailing federal policies, staff concluded that it did not have to address whether CDV qualifies as an information service under federal law. In its Exceptions to the Initial Report, Comcast demonstrated that the Hearing Examiners failure to consider Comcast s preemption arguments was legal error. The FCC s regulatory authority extends to jurisdictionally mixed services like CDV, and the courts have 1 See Vermont Public Service Board Dkt. No. 7316. Note that Comcast has filed a Petition for Reconsideration of the Board s October 28, 2010 Order in that proceeding. -2-

long affirmed the FCC s authority to preempt state regulation of ostensibly intrastate communications as long as the FCC can show that conflicting state regulation would thwart the achievement of valid federal policies. One such policy, which dates back more than 30 years, prohibits state common carrier/public utility regulation of information services on the grounds that such regulation conflicts with the federal deregulatory scheme. This policy has been affirmed by the federal courts of appeals twice and has been recognized by the United States Supreme Court. 2 With the legal standard thus clarified, the Commission instructed staff to issue a new report that addressed the full factual and legal record, including Comcast s preemption arguments. On August 3, 2010, staff issued the Supplemental Examiners Report ( Supplemental Report. While the Supplemental Report was a step in the right direction, in that it acknowledged the potential supremacy of conflicting federal law, it incorrectly concluded that CDV is a telecommunications service and not an information service. As Comcast explained in its Supplemental Exceptions, the Supplemental Report (1 failed to properly analyze the net protocol conversion that is an essential characteristic of the CDV service, which therefore qualifies it as an information service under 47 U.S.C. 153(20, and (2 erroneously concluded without any supporting evidence that CDV falls within the management and control exception to the information services definition. The Order fails to address these arguments. Instead, it largely repeats in many cases word-for-word the text of the Supplemental Report without considering Comcast s evidence or arguments. That was plain error under Maine administrative law rules, which entitles every 2 See Computer & Communications Indus. Ass n v. FCC, 693 F.2d 198, 206 (D.C. Cir. 1982; California v. FCC, 39 F.3d 919, 931 (9 th Cir. 1994; Nat l Cable & Telecomms. Ass n v. Brand X Internet Servs., 545 U.S. 967 (2005 ( Brand X. -3-

party to a proceeding the right to present evidence and arguments on all issues, 3 and requires the Commission to address the specific comments and concerns expressed about any proposed rule. 4 Simply put, as the Maine Supreme Court has ruled, the Commission may not ignore evidence before it. 5 The Order violates this fundamental principle. ARGUMENT I. The Order s Protocol Conversion Analysis Ignores Relevant Evidence And Controlling Law A. The Fact that CDV Transmits Communications that Begin and End as Voice Sounds is Irrelevant to Whether It Qualifies as an Information Service The Commission correctly states many of the relevant facts at pages 4-5 of the Order. It fails, however, to appreciate the legal significance of those facts. First, it finds that CDV does not qualify as an information service because the called party hears the same voice sound as that generated by the calling party. 6 In other words, the Commission concluded that whatever protocol conversion and information processing functions CDV may perform are irrelevant given that the underlying content of the transmission the users voice remains the same. This theory has been considered and squarely rejected by the FCC as inconsistent with the text of the statute. The FCC has ruled that, the statutory definition [of information service] 3 5 M.R.S. 9056(2. 4 Id. 8052(5. 5 New England Tel. & Tel. Co. v. Public Utilities Com'n, 448 A.2d 272, 312 n.42 (Me 1982; see also Wellby Super Drug Stores, Inc. v. Maine Unemployment Ins. Comm'n, 603 A.2d 476, 478 (Me.1992 (agency must apply law to the facts as presented. 6 Order at 18-20. -4-

makes no reference to the term content, but requires only that an information service transform or process information. 7 In so holding, the FCC explained that: an end-to-end protocol conversion service that enables an end-user to send information into a network in one protocol and have it exit the network in a different protocol clearly transforms user information [and is therefore an] information service under the 1996 Act. 8 Thus, the voice-in-voice-out theory that is the essential basis of the Order is simply not in accord with the FCC s interpretation of the statute. The Order does not acknowledge this argument. Instead, the Commission addresses the question from the other side of the information services / telecommunications services dichotomy, asserting that the unchanged content of CDV calls (voice-in-voice out renders it a telecommunications service. But that, too, is a legally faulty analysis, as the statutory definition of telecommunications requires no change in the form or content of the information as sent and received. 9 In the case of CDV, while there may be no change in voice content, the service performs a change in form, by converting IP-originated transmissions into TDM (and vice versa for exchanging calls with third-parties on a different network the PSTN. Thus, under the Supreme Court s analysis in Brand X, CDV is an information service because the protocol conversion it performs permits communicat[ions] between networks that employ different datatransmission formats. 10 B. The Order s Finding that CDV Does Not Perform a Net Protocol Conversion Rests on Errors of Fact and Law 7 See First Report and Order and Further Notice of Proposed Rulemaking, Implementation of the Non-Accounting Safeguards of Section 271 and 272 of the Communications Act, 11 F.C.C.R. 21905, 104 (1997 (emphasis supplied. 8 Id. 9 47 U.S.C. 153(43 (emphasis supplied. 10 Brand X, 545 US at 976-77. While Comcast cited this dispositive analysis from Brand-X in all of its pleadings, there is no reference to it in the Commission s final Order. -5-

As the Order s recitation of the facts explains, CDV calls are formatted into IP packets by the emta on the customer s premises, which are then either routed over Comcast s network to the media gateway, where they are converted to TDM for exchange with third-party carriers on the PSTN or routed to other CDV customers in IP. 11 In concluding that these facts do not qualify CDV as an information service, the Order commits at least two separate errors. First, the Order (at 21 inappropriately focuses on the digitized voice signal which is encoded into IP packets by the emta and then routed to the called party. The Order contends that no net protocol conversion has taken place because the digital signal remains unchanged. This argument, however, is similar to the voice-in-voice-out theory addressed above, and is equally unavailing. Nor is it true, as the Order suggests (at 19, n.11, that analog-to-digital conversions performed by traditional telecommunications carriers in their networks are themselves protocol conversions. To the contrary, the FCC expressly held otherwise more than 25 years ago, when it ruled that a change in electrical interface characteristics to facilitate calls is not a protocol conversion. 12 11 An additional omission in the Order is its failure to consider the legal significance of onnetwork calling. In the Supplemental Report, staff focused exclusively on this traffic to show that CDV was a telecommunications service because no net protocol conversion was performed (i.e., calls were routed IP all the way. See Supplemental Report at 6-7. Comcast noted in its Supplemental Exceptions (at 4 & n.3 that this focus on only a subset of all CDV traffic overlooked the fact that most CDV calls are routed off-network and thus require a TDM-to-IP conversion. The final Order makes the opposite mistake. It does not address the legal significance of CDV on-network calling at all, and ignores the FCC s Pulver Declaratory Ruling, 19 FCC Rcd 3307 (2004, which establishes that on-network, IP-to-IP voice calls qualify as information services under the Act. As Comcast has explained, the Commission needs to address the service that Comcast actually provides, not a subset of that service that fits within its legal theory supporting regulation. Comcast Supplemental Exceptions at 4 (citing 5 M.R.S.A. 11007(5 (requiring that Maine administrative agency orders be []supported by substantial evidence on the whole record (emphasis supplied. 12 In the Matter of Communications Protocols under Section 64.702 of the Commission's Rules and Regulations, Memorandum Opinion, Order, and Statement of Principles, 95 F.C.C.2d 584, 16 (1983. -6-

Second, it is undisputed that CDV calls enter Comcast s network in IP and exit in TDM, when they are handed off to third parties. The Order insinuates otherwise when it says that it does not concur with Comcast s characterization of the emta as a type of customer premises equipment (CPE that stands apart from its network. 13 However, no reason is offered for this lack of concurrence. Nor could one be. The law is clear that a carrier s network begins at the demarcation point, which is defined as the point at which the network terminates at a subscriber s premises. 14 Calls enter Comcast s network in IP. When they are converted into TDM for exchange with third-party carriers, that net protocol conversion constitutes an information service. II. The Order Ignores the Controlling Legal Principles Articulated by the FCC in its Service Classification Orders and Incorrectly Concludes that CDV Falls Within the Management and Control Exception Even if there were legitimate doubts about whether CDV performs a net protocol conversion, it would still qualify as an information service based on the FCC s analysis of the architecture of IP-routing in the service classification orders. That analysis should control here. In order to route CDV calls, both on-network and off, Comcast must conduct a domain name system ( DNS database look-up that associates 10-digit NANPA telephone numbers with IP addresses and encode that information into the CDV IP packets so that they can be delivered to the called-party. 15 This is an information service, as the FCC has ruled in its service 13 Order at 21. Moreover, it is no longer necessarily the case that emtas are provided exclusively by Comcast. See Order at 4. Comcast customers can now buy their own emtas at Best Buy. See Comcast User Agreement at 5 (av l at http://www.comcast.com/medialibrary /1/1/Customers/Customer_Support/Legal/Q3%20ResServices_HomeNetworkUniLegal_Stnd_E NG_comcastcom.pdf. 14 See 47 C.F.R. 69.2(cc (defining origination/termination ; 47 C.F.R. 68.3 (defining demarcation point; see also 47 C.F.R. 76.5(m(1-(3 (identical definitions for cable networks. 15 See Order at 21. -7-

classification orders, including, most relevantly, the Cable Modem Declaratory Ruling, 17 FCC Rcd 4798, 17, n.74 (2002 (explaining that DNS is an Internet service that enables the translation of domain names into IP addresses, 37-38 (explaining that DNS functionality are characteristic of information services. The Supreme Court, in Brand X specifically affirmed this analysis, explaining that: For an Internet user, DNS is a must.... nearly all of the Internet's network services use DNS. That includes the World Wide Web, electronic mail, remote terminal access, and file transfer. It is at least reasonable to think of DNS as a capability for... acquiring... retrieving, utilizing, or making available Web site addresses and therefore part of the information service cable companies provide. 16 While the Order does not address the legal analysis from the Cable Modem Declaratory Ruling, or the Supreme Court s discussion of that ruling in Brand X, the Order (at 21 does acknowledge the necessary use of DNS and other IP functionalities to route CDV communications on Comcast s IP network. But it reaches the wrong conclusions from those facts indeed it reaches a conclusion that the Supreme Court squarely rejected in Brand X. Specifically, the Order finds that while Comcast s service may appear[], at first blush, to fit comfortably within the statutory definition of information service this is not the case. Instead, the Order concludes that, the activities of the soft switch, routers, CMTS equipment, and Media Gateway devices which participate in the routing of the IP packets over their transmission path to the recipient s emta, are all activities which are used for the management, control, or operation of a telecommunications system, and thus fall into the statutory exception that excludes from the definition of information service capabilities that are used for the management, control, or operation of a telecommunications system. 17 16 Brand X, 545 U.S. at 999 (punctuation altered (internal quotation and citation omitted. 17 Order at 21 (quoting 47 U.S.C. 154(20. -8-

This is the very same argument that the dissent relied on in Brand X which the majority rejected in affirming the FCC s classification order: The dissent claims that access to DNS does not count as use of the informationprocessing capabilities of Internet service because DNS is scarcely more than routing information, which is expressly excluded from the definition of information service. But the definition of information service does not exclude routing information. Instead, it excludes any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service. 47 U.S.C. 153(20. The dissent's argument therefore begs the question because it assumes that Internet service is a telecommunications system or service that DNS manages. 18 The Order makes the same mistake. It puts the cart before the horse by finding that the functionalities that define CDV as an information service are used to manage and control a telecommunications service or system without first identifying what that system or service might be. The FCC addressed this analytical fallacy in its Pulver order another case that Comcast has relied upon but that goes unmentioned in the Commission s Order. In Pulver, the FCC disagree[d] with a party s contention that Pulver s Internet telephony service was not an information service because it fit within the management and control exception: the plain language of the definition dictates a finding that the exception could not apply to Pulver because Pulver is not managing a telecommunications system or telecommunications service. Examining the history of the text and Commission precedent supports the same result. The telecommunications management exception was initially included in the definition of information service contained in the Modification of Final Judgment. That definition explained what services the BOCs were not permitted to offer while recognizing that certain computer processing capabilities were permitted within the provision of their regulated services. Thus, the telecommunications management exception permitted the BOCs to improve their telecommunications networks without running afoul of the restriction on providing information services. Prior to the MFJ and divestiture, the Commission had permitted certain computing capabilities to be incorporated into AT&T's telecommunications network to facilitate and modernize the provision and use of basic telephone service. This 18 Brand X, 545 U.S. at 1000, n.3. -9-

does not mean that when Pulver or another information services provider offers these capabilities on a stand-alone basis that they are transformed into telecommunications services. 19 As Pulver explains, it is circular for the Commission to define CDV as a telecommunications service on the grounds that it is used to manage and control a telecommunications services without first identifying the underlying service that is being managed and controlled. See also Federal-State Joint Board on Universal Service, Appeal of Administrator's Decision Radiant Telecom, Inc. Filer ID 822268, Order, 22 FCC Rcd. 11811, 9 (2007 (network management exceptions are incidental to an underlying telecommunications service and do not alter[] their fundamental character. Finally, the Order inappropriately relies on the FCC s AT&T Declaratory Ruling. In that case, AT&T argued that the long-distance transport, in Internet Protocol, of PSTN-originated and PSTN-terminated communications rendered the entire transmission an information service. The FCC rejected AT&T s view because, [u]sers of AT&T s service obtain only voice transmission with no net protocol conversion. 20 In other words, all calls entered and left AT&T s network in the same protocol TDM. As the FCC held, AT&T s service does not involve a net protocol conversion and does not meet the statutory definition of an information service. 21 The Order, nonetheless, relies on the AT&T Declaratory Ruling, citing the FCC s observation that, [t]o the extent that protocol conversions associated with AT&T s specific service take place within its network, they appear to be internetworking conversions, which the 19 Pulver Declaratory Ruling, 19 FCC Rcd. 3307, 3314 13 (2004 (internal citations omitted. 20 AT&T Declaratory Ruling. 19 FCC Rcd 7457 12 (2004 (emphasis supplied. 21 Id. 13. -10-

Commission has found to be telecommunications services. 22 The Order finds (at 22 that the net protocol conversion performed by CDV is analogous to the internetworking conversion performed by AT&T because, according to the Order, [i]n both cases, protocol conversion is used for the management, control, or operation of a telecommunications system, because without the conversion within the telecommunications system, interconnected carriers would be incapable of completing the voice calls between all of the users of the system. This characterization is inaccurate. The TDM-to-IP-to-TDM conversion performed were internal to AT&T s network and done as a convenience so that AT&T could route telecommunications traffic on its Internet backbone. 23 They were not done so that other carriers could interconnect with AT&T. AT&T was simply routing calls within its own network from one carrier to another, handing them off in the same TDM format in which they were sent and received. No net protocol conversion was performed, which is why they were deemed to be telecommunications not information services. CDV is, thus, an information service for the same reason that AT&T s service was not. CDV traffic enters the CDV network in IP protocol, is converted to TDM at the media gateway, and exits the CDV network in TDM. CDV performs a net protocol conversion so that CDV customers can communicate with PSTN customers, and vice versa, not to manage or control a telecommunications system. Moreover, this is not an anomalous result, as the Order contends (at 22. To the contrary, network bridging services that facilitate communications between end-users on different networks that employ different data-transmission formats are information services, as the Supreme Court has recognized. Brand X, 545 US at 976-77 (observing that computer processing applications, including protocol conversion services 22 Id. 12. 23 AT&T Declaratory Ruling 1, 11-12. -11-

that make it possible to communicate between networks that employ different data-transmission formats qualify as information services. III. The Commission Should Consider the Policy Implications Before Imposing a Certification Obligation on Comcast IP Finally, if the Commission chooses not to revise the Order to correct the errors discussed above, Comcast urges the Commission to follow the lead of the Vermont Public Service Board and bifurcate this proceeding into two parts, as Comcast has suggested in its previous filings. As the Commission may be aware, the Vermont Board is undertaking a similar evaluation of the proper regulatory treatment of interconnected VoIP services like CDV, but has bifurcated the case into two parts. Only in the second phase of the case will the Board examine the policy wisdom of applying the state s telephone service regulations to VoIP. The Commission should do the same, and examine whether and to what extent, if any, Maine s specific traditional telephone regulations should apply to VoIP before it imposes them. -12-

CONCLUSION For the reasons set forth in Comcast s Opening and Reply Briefs, its Exceptions, and herein, Comcast respectfully asks the Commission to rescind the Order or instruct the Hearing Examiners to issue a new Report that considers Comcast s evidence and arguments. Alternatively, the Commission should convene a second phase of this docket to consider what regulations, if any, should apply to interconnected VoIP before it imposes a certification obligation. Respectfully submitted: Samuel F. Cullari Comcast Cable Communications, LLC One Comcast Center, 50th Floor 1701 John F. Kennedy Blvd. Philadelphia, PA 19103 Tel: (215 286-8097 Fax: (215 286-5039 Samuel_Cullari@Comcast.com John C. Dodge Michael C. Sloan DAVIS WRIGHT TREMAINE, LLP 1919 Pennsylvania Ave., NW., Ste. 900 Washington, DC 20006 Tel: (202 973-4205 Fax: (202 973-4499 johndodge@dwt.com michaelsloan@dwt.com November 16, 2010-13-

CERTIFICATE OF SERVICE I, John C. Dodge, do hereby certify that a copy of the forgoing Petition for Reconsideration was filed electronically and served via e-mail this 16th day of November 2010 to the following parties of record: William C. Black, Esq. Deputy Public Advocate Wayne Jortner, Esq. Senior Counsel Maine Public Advocate 103 Water Street, 3rd Floor Hallowell, ME 04347 William.C.Black@maine.gov Wayne.R.Jortner@maine.gov Ben Sanborn, Esq. Telephone Association of Maine PO Box 179 Nobleboro, ME 04555-0179 ben@sanbornesq.com William S. Kelly, Esq. Kelly & Associates, Inc. 96 High Street Belfast, ME 04915 bkelly@uninets.net Glenn Richards Pillsbury Winthrop Shaw Pittman LLP 2300 N Street, NW Washington, DC 20037-1122 glenn.richards@pillsburylaw.com Joseph G. Donahue, Esq. PretiFlaherty PO Box 1058 45 Memorial Circle Augusta, ME 04332-1058 jdonahue@preti.com Kimball L. Kenway, Esq. Susan Rockefeller, Esq. One Canal Plaza, Suite 1000 PO Box 7320 Portland, Maine 04112-7320 kkenway@curtisthaxter.com Matthew A. Brill, Esq. Brian W. Murray, Esq. Latham & Watkins, LLP 555 Eleventh Street, NW Suite 1000 Washington DC 20004-1304 Matthew.Brill@lw.com Brian.Murray@lw.com John C. Dodge