Let’s Talk about Voice Competition

12.19.2012

Today we’re asking the Federal Communications Commission (FCC) to review its approach adopted in the 1980s for how it regulates the “phone companies” that provided traditional voice calling services. Back then there was only one local phone company and you really actually dialed a call. People thought long distance calls were special, and were careful to make them only at certain times when rates were lower.

Things are very different now – people connect through many new devices, services, and networks providing multiple ways to communicate across town or across the globe. We talk less and keyboard more. With broadband and smartphones, our communications options are light-years different than they were in the 80s.  Who knows or cares now that a “call” might be local, intrastate toll or interstate long-distance or thinks that calling is only one way to get in touch with someone?

While the communications market has advanced immeasurably, a basic FCC-established premise for regulation of the original voice companies has remained unchanged for over 25 years. This premise is that the original companies are dominant providers of “switched access service,” which is essentially the FCC-regulated component of regular voice calling, while competing providers are not dominant, and subject to less stringent or virtually no regulation.

This premise in no way reflects today’s realities.

We’d like the FCC to begin a dialogue on rethinking that premise, and that is what we’re seeking with the petition we’re filing today. It is time to talk about updating this approach to voice services regulation so that we can remove obstacles to a more competitive market, encourage more investment and bring more benefits to consumers.  This is the conversation we are asking the commission to begin.

The petition documents the state of today’s declining market for traditional voice calling and explosive growth in new ways to call and to connect. More households today have “cut the cord” and subscribe only to wireless service than subscribe to traditional phone service. And it’s estimated that by next year, the number of households being served by an interconnected Voice over Internet Protocol (VoIP) service, often provided over cable company networks, will surpass the number of households subscribing to traditional phone service. That the FCC has been discussing transitioning off the traditional voicenetwork to new IP networks shows that any premise of traditional phone company dominance has long-passed its usefulness.

Technically, this petition asks the FCC to declare that the original phone companies (known as incumbent local exchange carriers or ILECs at the FCC) no longer are dominant in providing “switched access services.” If granted, these companies would be relieved of certain extra tariffing obligations and move somewhat closer to regulatory equivalencewith their closest competitors. Key public policy obligations such as 911, customer privacy and disabilities access would not be affected.  Also outside the scope of the petition are things like special access, interconnection and unbundled network elements.

We look forward to a productive dialogue over whether this presumption of dominance reflects today’s reality and whether it serves any useful purpose.  We believe that continued enforcement of the dominant carrier regime has significant negative consumer and policy consequences. Whatever public policy goals may once have been achieved by treating “ILECs” as “dominant” in the provision of “switched access services,” those goals are no longer served by applying unique regulatory burdens to one among many communications platforms.  Consumers and the economy would be better served by a regulatory system that reflects today’s multi-networked reality.

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