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February 18, 2008
Legacy Regulations and the Future of Internet Communications: The Implications of Two Seemingly Subtle FCC Proceedings
The FCC will be accepting Initial Comments tomorrow on two Petitions that propose radically different approaches to how emerging Internet communications should interconnect to the narrowband public-switched telephone network (“PSTN”). These two Petitions, which might not get much attention in the mainstream press (or even the trades), will likely have profound and long-term consequences on the evolution and future of the Internet. I urge the Internet innovators, entrepreneurs and enthusiasts to take note and not sit by idly while the FCC writes the rules without our input. While these proceedings are technically about “voice” applications that touch the PSTN, the logic and rules that apply to Internet-based “voice” terminating to the PSTN, will ultimately be extended to every other application, once the policymakers fully digest and incorporate the concept that there really is no difference between voice or video or data or any other application in an Internet-enabled, digital communications world.
The Petitions:
Feature Group IP Forbearance Petition: Asks FCC to ensure that providers of Voice-Embedded Internet communications applications be given the assurance that they may deploy and offer such services to the fullest extent possible without undue interference from the network owners. (By way of full disclosure, I am doing legal/advocacy work in support of Feature Group IP.)
Embarq Forbearance Petition: Asks the FCC to eliminate the “Enhanced Service Provider” (“ESP”) exemption to interstate access charges, which currently permits ESP VoIP providers to purchase access to the network as any other customer of the telecommunications carrier. A grant of the Embarq petition would make ESPs telecommunications carriers, and thus subject to the full panoply of carrier regulation, including access charges.
Some Brief History
Feature Group IP had filed its Petition back in October, 2007. The focus of the Feature Group IP Petition was to ensure that Internet communications applications and networks could evolve as robustly as possible without being mired down by archaic telecom regulations, written for the analog telephone world and that had not anticipated the revolutionary potential of the Internet and digital technology. In particular, the Feature Group IP Petition wanted to make sure that participants in Internet communications could avail themselves of the power of “Group Forming Networks” and the network effects that can only be maximized when every potential endpoint is capable of participating in an Internet-enabled communications, even those endpoints relegated to the PSTN. Feature Group IP’s concern was that the phone companies were charging the highest rate possible (on the order of several cents a minute) to allow an Internet communication to include a participant on the PSTN), making it economically untenable to allow these end-users to participate in Internet-based communications.
The FCC put the Feature Group IP Petition out for Public Comment on Dec. 18. Subsequently (and presumably in response to the Feature Group IP Petition), Embarq, the phone company, filed a Petition with the FCC seeking essentially the opposite result. (Technically, the arguments raised in the Feature Group IP Petition and the Embarq Petition are distinct issues and not necessarily mutually exclusive. The Feature Group IP Petition speaks to enabling new Internet-based technologies, applications and services, while the Embarq Petition is focused on preservation of legacy telecom business model issues.)
The United States Telecommunications Association, the leading trade association for the incumbent phone companies sought to join the two proceedings. Although the FCC did not join the proceedings, it did postpone the comment cycle on the Feature Group IP Petition so that the two proceedings would proceed on the same comment cycle. Initial Comments are due tomorrow, and Reply Comments are due March 14.
I am convinced that a wrong decision in either of these seemingly arcane proceedings would serve to ensure, for many years to come, that phone companies – the primary gatekeepers to the Internet, be it via narrowband or broadband access -- may set the terms, rates and conditions for access to end-users. This battle over the price of a voice-embedded connection to an end-user on the narrowband public-switched telephone network is really just the camel’s nose under the tent in the carriers’ war to control the rates, terms conditions and functionality of access to end users.
The Petitions in the Context of the Open Internet
Those who care about the Open Internet debate should recognize this battle as simply the most immediate and most potentially devastating effort by the phone companies to charge supra-competitive rates when an Internet communication to the narrowband network includes a voice component.
If the telcos/Internet Access Providers are allowed to charge the Internet application providers when a communication to the carriers’ customer includes a voice application, we will have entered the slippery slope by which carriers will be allowed to charge Internet application providers for all user communications (be they voice, video, data or other). For now, the telcos claim that there are historic and current qualitative distinctions between voice and other communications that require disparate regulatory treatment for voice. This is a technologically unsustainable charade based on the legacy distinctions between voice and other services. In an Internet-enabled world, this distinction cannot persist, and when regulators recognize that the distinction cannot persist, it will be much easier for the access providers to segue into charging for all communications if they have their foot in the door and a regulatory conclusion that Internet-delivered voice is subject to access charges by the access provider.
The Likely Downside of Allowing the Internet Access Providers to Charge for Voice-Embedded Internet Communications to Reach End-Users
Not even the greatest visionaries among us can predict how Internet communications could revolutionize the ways in which we interact or what the killer applications of tomorrow might be, but it’s essentially that the Internet communications industry not be straddled with legacy regulations or be captive to the arbitrary interconnection policies and rates established unilaterally by the phone companies – the gatekeepers to the Internet. Off the top of my head, the most obvious and immediate Internet user implications of either a denial of the Feature Group IP Petition or a grant of the Embarq Petition are the following:
• Stifle the growth of any Internet-based “click-to-call” services, which virtually every Internet-based company has deployed or intends to deploy;
• Eliminate, or severely limit functionality of, other services that incidentally require a voice connection to a narrowband telephone customer. This would include such services as Internet search enabled call termination and Internet text to speech enabled applications;
• Curtail use and functionality of network-enabled collaboration calling whether from a game application or any other device-based network;
• Limit the network effects and power of Group Forming Networks that should be able to include any potential endpoint on the communications network of networks.
A Call to Arms
I urge members of the Internet communications industry to follow these two proceedings, and consider filing reply comments encouraging the FCC to ensure that Internet communications may evolve as effectively, efficiently and rapidly as possible and ensure that all end-users, even those currently relegated to the PSTN -- that limited-functioning, analog, narrowband off-ramp on the Internet-enabled network of networks – are able to participate to the fullest extent possible in the Internet and communications revolution.
I am convinced that we have to get the FCC to hold the line here and now. If the telcos succeed in extracting usurious per minute access revenue from Internet Application Providers when the communication includes a “voice component”, there is no reason the logic won’t apply to all communications when a bit is truly recognized to be just a bit.
Mark my words – what the FCC says in these proceedings about Internet-based “voice” applications terminating to the PSTN will determine what the FCC ultimately says about all applications and regardless of whether they terminate to a narrowband or broadband network.
All Americans should be able to realize what happens when different networks interconnect and interoperate without intervening gatekeepers extract excessive revenue to the detriment of the broader economic and social good. American consumers across all networks should can all share the value that accrues from the combination of Reed’s and Metcalf’s law, but that can only be achieved when we create a ubiquitous, interoperable and seamlessly interconnected “network of networks”, an integrated communications system in which no single network wields excessive control over the others by demanding non-reciprocal, arbitrage-creating, technology-debilitating rents of all others merely so they can all intercommunicate. In an Internet-enabled world, consumers of narrowband PSTN service should not be precluded from fully participating in the digital Internet revolution.
Tags: Open Internet, Feature Group IP, Embarq Communications,
Jonathan Askin, FCC
Posted by jonathan.askin at February 18, 2008 10:31 AM