[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE EVOLUTION OF WIRED COMMUNICATIONS NETWORKS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 23, 2013
__________
Serial No. 113-86
Printed for the use of the Committee on Energy and Commerce
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania LOIS CAPPS, California
MICHAEL C. BURGESS, Texas MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee JANICE D. SCHAKOWSKY, Illinois
Vice Chairman JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
CORY GARDNER, Colorado BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas PAUL TONKO, New York
ADAM KINZINGER, Illinois JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
_____
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
LEE TERRY, Nebraska MICHAEL F. DOYLE, Pennsylvania
MIKE ROGERS, Michigan DORIS O. MATSUI, California
MARSHA BLACKBURN, Tennessee BRUCE L. BRALEY, Iowa
STEVE SCALISE, Louisiana PETER WELCH, Vermont
LEONARD LANCE, New Jersey BEN RAY LUJAN, New Mexico
BRETT GUTHRIE, Kentucky JOHN D. DINGELL, Michigan
CORY GARDNER, Colorado FRANK PALLONE, Jr., New Jersey
MIKE POMPEO, Kansas BOBBY L. RUSH, Illinois
ADAM KINZINGER, Illinois DIANA DeGETTE, Colorado
BILLY LONG, Missouri JIM MATHESON, Utah
RENEE L. ELLMERS, North Carolina G.K. BUTTERFIELD, North Carolina
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)
(ii)
C O N T E N T S
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Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 2
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 3
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 3
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 6
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 10
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 10
Hon. Peter Welch, a Representative in Congress from the State of
Vermont, opening statement..................................... 68
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 200
Witnesses
James W. Cicconi, Senior Executive Vice President, External and
Legislative Affairs, AT&T, Inc................................. 68
Prepared statement........................................... 71
Answers to submitted questions............................... 201
Mark Iannuzzi, President, TelNet Worldwide, Inc.................. 82
Prepared statement........................................... 85
Harold Feld, Senior Vice President, Public Knowledge............. 98
Prepared statement........................................... 100
Answers to submitted questions............................... 208
John D. Burke, Commissioner, Public Service Board, State of
Vermont, On Behalf of the National Association of Regulatory
Utility Commissioners.......................................... 123
Prepared statement........................................... 125
Answers to submitted questions............................... 250
Randolph J. May, President and Founder, Free State Foundation.... 138
Prepared statement........................................... 140
Submitted Material
Chart, undated, ``ILEC Switched Share of Households Is Declining
Sharply,'' U.S. Telecom, submitted by Mr. Latta................ 5
Letter of October 23, 2013, from Steven K. Berry, President and
Chief Executive Officer, Competitive Carriers Association, to
Mr. Upton, et al., submitted by Ms. Eshoo...................... 8
Draft, dated September 2013, ``No Dialtone: The End of the Public
Switched Telephone Network,'' Kevin Werbach, submitted by Mr.
Waxman......................................................... 12
Article, dated October 22, 2013, ``Rivals Protest AT&T Rate
Shift,'' Ryan Knutson, The Wall Street Journal, submitted by
Mr. Doyle...................................................... 170
Ex Parte Communication, dated October 18, 2013, from Ad Hoc
Telecommunications Users Committee, et al., to Marlene H.
Dortch, Secretary, Federal Communications Commission, submitted
by Mr. Doyle................................................... 172
THE EVOLUTION OF WIRED COMMUNICATIONS NETWORKS
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WEDNESDAY, OCTOBER 23, 2013
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:34 a.m., in
room 2123, Rayburn House Office Building, Hon. Greg Walden
(chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Shimkus,
Terry, Blackburn, Scalise, Lance, Guthrie, Gardner, Pompeo,
Kinzinger, Long, Ellmers, Barton, Upton (ex officio), Eshoo,
Doyle, Matsui, Welch, Dingell, Pallone, DeGette, Butterfield,
and Waxman (ex officio).
Staff present: Gary Andres, Staff Director; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Andy Duberstein,
Deputy Press Secretary; Kelsey Guyselman, Counsel,
Communications and Technology; Grace Koh, Counsel,
Communications and Technology; David Redl, Chief Counsel,
Communications and Technology; Charlotte Savercool, Legislative
Coordinator; Jessica Wilkerson, Staff Assistant; Roger Sherman,
Democratic Chief Counsel; Shawn Chang, Democratic Senior
Counsel; Margaret McCarthy, Democratic Professional Staff
Member; Kara van Stralen, Democratic Policy Analyst; and
Patrick Donovan, Democratic FCC Detailee.
Mr. Walden. We will call the Subcommittee on Communications
and Technology to order and begin our hearing on the evolution
of wired communications networks.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Wired communications networks have come a long way since
the days of the telegraph or the rotary phone. It is getting
harder and harder to remember a time when if you wanted to
reach out and touch someone, Ma Bell's pair of twisted copper
wires were the only option. Today's consumers have so many more
options. Cable, wireless, satellite, and, yes, even the
telephone companies are all offering Americans the connectivity
to communicate with the world.
As all of the services consumers have grown to love as
standalone networks, like voice and video, are increasingly
just data applications, completion between network providers
has never been more vigorous, and over-the-top providers like
Skype, Apple, Apple's Facetime, Netflix, and Hulu are bringing
a new facet to competition for consumers' communications
dollars. But while their competitors have gone through
successive generations of technological improvements, wired
communications networks have languished. This isn't because of
a lack of innovation, but rather because of a declining user
base. High costs and unique regulatory mandates have conspired
to make the economics of upgrade untenable.
Today, however, we stand on the cusp of two transitions in
the wires network: the IP transition and the upgrade of the
networks to fiber. Now, these transitions are a natural
evolution as technology advances, greater capabilities develop,
prices drop, and competition forces the market to respond.
While some of the costs of upgrade have changed, and wire
line providers are increasingly branching out beyond their
voice service roots, the outdated regulations once enacted to
break up a monopoly remain. Consumers have come to expect, as
well as they should, competition among providers in the
innovation--innovative offerings that result from that
competition. The question we face today is this: What is the
appropriate role for the Federal Government in this transition?
We should be looking not only on the theoretical impact of
competition policies on the market as they exist today, but
also to the practical impact of the rules in an uncertain
future. ILECs looking to invest in future technologies should
be able to do so without the specter of maintaining legacy
networks. Those in the competitive community should be able to
look to the future with the certainty that they have the
opportunity to serve their customers. And consumers should be
able to embrace this transition without an interruption in the
services they already enjoy.
We must strike the appropriate balance between protecting
consumers, promoting competition, and not slowing the pace of
needed innovation. The Internet and wireless worlds have
thrived without heavy regulation. The last thing we want do is
stifle the unprecedented growth in innovation of the Internet
by subjecting it to complicated, outdated, government-imposed
rules of the plain, old telephone networks.
It is time to take a hard look at the role of regulation in
the modern wired communications network marketplace, and our
witnesses are here to help us do just that.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Wired communications networks have come a long way since
the days of the telegraph or the rotary phone. It's getting
harder and harder to remember a time when if you wanted to
``reach out and touch someone,'' Ma Bell's pair of twisted
copper wires was the only option. Today's consumers have so
many more options. Cable, wireless, satellite and, yes, even
the telephone companies, are all offering Americans the
connectivity to communicate with the world. As all of the
services consumers have grown to love as stand alone networks--
like voice and video--are increasingly just data applications,
competition between network providers has never been more
vigorous, and over-the-top providers, like Skype, Apple's
FaceTime, Netflix and Hulu are bringing a new facet to
competition for consumers' communications dollars.
But while their competitors have gone through successive
generations of technological improvements, wired communications
networks have languished. This isn't because of a lack of
innovation, but rather because a declining user base, high
costs, and unique regulatory mandates have conspired to make
the economics of upgrade untenable. Today, however, we stand on
the cusp of two transitions in the wires network: the IP
transition and the upgrade of networks to fiber. These
transitions are a natural evolution as technology advances,
greater capabilities develop, prices drop and competition
forces the market to respond.
While some of the costs to upgrade have changed and
wireline providers are increasingly branching out beyond their
voice service roots, the outdated regulations once enacted to
break up a monopoly remain. Consumers have come to expect, as
well they should, competition among providers and the
innovative offerings that result. The question we face today is
this: what is the appropriate role for the Federal Government
in this transition?
We should be looking not only on the theoretical impact of
competition policies on the market as it exists today, but also
to the practical impact of the rules in an uncertain future.
ILECs looking to invest in future technologies should be able
to do so without the specter of maintaining legacy networks;
those in the competitive community should be able to look to
the future with the certainty that they have the opportunity to
serve their customers; and consumers should be able to embrace
this transition without an interruption in the services they
already enjoy. We must strike the appropriate balance between
protecting consumers, promoting competition, and not slowing
the pace of needed innovation.
The Internet and wireless worlds have thrived without heavy
regulation. The last thing we want to do is stifle the
unprecedented growth and innovation of the Internet by
subjecting it to complicated, outdated, government-imposed
rules of the plain old telephone network. It's time to take a
hard look at the role of regulation in the modern wired
communications network marketplace, and our witnesses are here
to help us do just that.
Mr. Walden.I thank the witnesses for their testimony, and
now I would yield to my colleague from Texas, Mr. Barton, for 1
minute.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman. That is perfect
timing; I just walked in.
I want to thank you for holding this hearing on the
transition of the Internet Protocol. It is a topic that we have
not discussed, but we need to discuss in this Congress.
I was actually serving on this subcommittee and the full
committee back in 1996 and participated in many conversations,
debates, hearings, and markups regarding that act. I remember
discussing how we could make the marketplace more competitive.
And at that time AT&T did basically have monopoly, and we
believed that creating the incumbent local exchange, the ILECs,
and then the competitive local exchange, was a good solution to
spur competition.
That marketplace then and the marketplace today, Mr.
Chairman, as you know, are not the same. I do question now
whether we need the Title 2 protections of the CLECs that we
put in place back in 1996, and I think this hearing is a good
start to answering that question.
Mr. Walden. Thank you.
And I now recognize the gentleman from Ohio, Mr. Latta, for
42 seconds.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Thank you very much, Mr. Chairman. And thank you
very much for holding this hearing today, and I appreciate our
witnesses for being here today.
Within the last three decades, we have entered a digital
age of communications and witnessed the emergence of multimodal
competition and a dynamic Internet ecosystem that is replacing
the public switched telephone network and time-division
multiplex technologies with Internet Protocol-based platforms.
As we continue to see the convergence and evolution of our
telecommunications marketplace, the future of regulation is a
topic that must be addressed so that it does not thwart future
investment, innovation, or economic growth. We need to ensure
that current laws and regulations reflect the technologies and
competitive dynamics of today's marketplace, while protecting
consumers' ability to access the communications services of
their choice and safeguarding the reliability and security of
those services.
I would also ask to submit this chart, Mr. Chairman, for
the record, showing the declining share of U.S. households with
ILEC switched landline service as their primary line service
over the last 10 years.
Look forward to hearing from our witnesses today, and I
yield back.
Mr. Walden. And, without objection, the chart you reference
will be submitted for the record.
[The chart follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. We now turn to my friend and colleague from
California Ms. Eshoo for an opening statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman. And welcome to all of
the witnesses and packed hearing room.
Seventeen years ago, the 1996 act stated its intention,
quote, ``to promote competition and encourage the rapid
development or deployment of new telecommunication
technologies.'' In the years that have followed, hundreds of
new entrants have emerged, and with their creativity and
ingenuity, billions of dollars have been invested, and
thousands of new jobs have been created. So there have been a
lot of good things that have come from that.
As the title of today's hearing suggests, an evolution--and
I underscore the word ``evolution''--in wired communication
networks is under way, creating new ways of delivering a
familiar service, a phone call. For over a decade
communications companies have been making the transition to IP.
And so I think it is incumbent upon all of us here to decide
why we would remove rules that have helped pave the way for
greater competition and innovation in the marketplace, and it
is a worthy examination.
Changes in technology and infrastructure do not alter the
national goals that have always guided our communications
policies. As Commissioner Rosenworcel and Public Knowledge have
both articulated, our conversation should begin by laying out
the core values or principles that will guide the transition to
all IP voice networks.
Fundamentally the FCC must ensure universal service to all
Americans and the rules of the road for competition, as well as
strong consumer protections and access to 911. Consumers and
businesses have to have confidence in the reliability and the
functionality of these services, particularly during times of
emergency. And I am sure it is an area that we are going to
hear about and concentrate on today.
The reality is is that consumers don't consider whether a
phone call is delivered through a traditional switched network
or via IP. They just expect their phone call to connect as it
always has.
We all support investments that enable companies to offer
their consumers new and innovative services and do so more
efficiently and reliably, but changes in technology don't
automatically--don't automatically--make markets more
competitive. I look forward to our witnesses' perspectives on
how we can ensure that the IP transition results in more
competitive choices.
And finally it is important that the investment in job
creation--to remember that the investments in job creation do
not come from just two or three companies, but rather an
ecosystem, and we are blessed to have that in our country, that
includes hundreds of communications companies both small,
medium, and large. Earlier this year a study found that updated
procompetition policies would stimulate the hiring of up to
650,000 new employees in the telecom sector over the next 5
years and $184 billion of private funds into U.S.
telecommunications networks.
So, Mr. Chairman, the topic of today's hearing raises--
first of all, it is an important topic. It also raises
important questions that it is our responsibility to have
thoroughly answered. As the migration to all-IP networks
continues, the testimony of our witnesses--and we have a
sterling panel here today--will help ensure that our laws and
regulations promote new investment, competition and consumer
choice.
And I would like to ask unanimous consent, Mr. Chairman,
that this letter from the Competitive Carriers Association
reiterating the importance of long-standing, tech-neutral
interconnection requirements be submitted for the record.
Mr. Walden. Without objection.
[The letter follows:]
[GRAPHIC] [TIFF OMITTED]
Ms. Eshoo. Thank you. And I yield back.
Mr. Walden. Gentlelady yields back the balance of her time.
The chair now recognizes the vice chair of the full committee,
the gentlelady from Tennessee, Mrs. Blackburn.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman. And I want to
thank you for holding this hearing. It is important. It is
timely. And we want to welcome our witnesses. And thank you for
being here.
As you have heard, each of us talk about competition and
looking at how that has changed in the communications
marketplace. And today we have that intermodal competition
among the ILECs, the CLECs, VoIP, cable, satellite, others. But
these competitive services are subject to different rules based
on outdated assumptions. And I think that it is not easy for
regulators in the Federal Government and here in DC to change
how they think about the treatment toward communications in
today's marketplace. And I do feel that it is our
responsibility to look at how we create the appropriate
environment, put some regulatory certainty in place, and then
encourage that private capital and investment and focus on
creating jobs.
There are three things that I want to drill down on a
little bit on today with you all. Number one, is it fair to
tell someone who wants to invest in tomorrow's technology that
they need to slow down in order to maintain an old network that
they don't want to invest in anymore? Number two, does it still
make sense for the old rotary-dial regulatory model--and, yes,
some of us do remember that model--to hold back the
communications revolution that is before us now? And, number
three, how can we make the transition to the Internet Protocol
as seamless and dependable as possible? Those are questions
worthy of discussion.
I thank you all for your time, and at this time I will
yield to any other Member--I do not have anyone in the queue.
Mr. Walden. Anyone else on the Republican side want to make
any comments? If not, the gentlelady yields back.
Now recognize my friend, the gentleman from California Mr.
Waxman, for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman.
Since the days of a black rotary phone, Americans have been
able to count on the phone network to call friends and family,
conduct business, and reach emergency services when needed.
Today, thanks to innovation and competition, consumers can
connect to the phone network in more ways than ever before, but
when we pick up a wireless smartphone or dial a number over
Voice over Internet Protocol service, few of us pause to
consider the technology involved. We simply expect our phone
calls to go through.
The ongoing transition from traditional circuit-switched
networks, the Internet Protocol or IP-based networks is the
technical backdrop for today's hearing, but our phone network
is more than a system of wires, switches, and technical
protocols. It is an essential part of the social and economic
fabric of the United States. As we consider this next network
evolution, we must continue to protect the core values that
have guided our communications policy for nearly a century.
Many of today's witnesses have articulated some version of
these values, and there is widespread agreement on these
principles.
Our commitment to universal service is a recognition that
all of us benefit when everyone is connected. We protect
competition because it is the most efficient way to generate
new products and lower prices, with the added benefits of
limiting regulation. We have rules for consumer protection,
because the marketplace needs oversight to ensure that services
like 911 are provided even if the market is not yet demanding
them. This is a mandate Congress has entrusted to the FCC, and
it does not change with new generation of technology.
I think we all recognize the transition to IP-based
networks is already happening, and this is a good thing. The
transition means more investment and opportunities for economic
growth and new services that can improve everything from
healthcare delivery to energy efficiency. The challenge we face
is how to manage this transition in a way that does not disrupt
businesses and consumers that rely on traditional services
today.
I agree with Mr. Cicconi that we need the FCC as an expert
agency to help guide the evolution to an all-IP network, but I
caution against using the advent of IP-based services as a
vehicle to try to undermine the FCC's authority to preserve
competition and protect the public. Whether addressing
complaints about rural call completion or ensuring network
reliability during disasters, we need the FCC to address the
impacts of the IP transition. A vibrant and vital FCC is
critical to ensuring that the transition ultimately achieves
the goal we all share, which is a world-class network that
delivers greater benefits for consumers and our economy.
And I thank Chairman Walden for holding this important
hearing and working with us to assemble a balanced panel.
Mr. Chairman, I would like to ask unanimous consent to
enter into the record a paper by Professor Kevin Werbach titled
``No Dialtone: The End of the Public Switched Telephone
Network.''
Mr. Walden. Without objection.
[The information follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Waxman. And, Mr. Chairman, I wish at this time to yield
the balance of my time to the gentleman from Vermont, Mr.
Welch.
OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VERMONT
Mr. Welch. Thank you very much.
I have the privilege of introducing John Burke, a Vermonter
from Castleton, Vermont, graduate of Dartmouth College, and 12-
year member of the Public Service Board, which is our public
utility commission. And John has served on the Committee on
Telecommunications with the National Association of Rural
Utility Commissioners, and one of the things that he is so good
at is talking about the impact on rural areas of telecom
policies. And Congressman Latta and I, as you know, started a
Rural Caucus to try take a specific look at how the policies
that we have to implement are going to be affecting rural
areas, and there is no person with more experience and wiser
counsel than the person that we are going to hear from, John
Burke from the great town of Castleton, Vermont. Thank you,
John.
Thank you, Mr. Chairman. I yield back.
Mr. Walden. The gentleman yields back his time, and the
gentleman from California yields back the balance of his time.
So now we are ready to move forward with our distinguished
panel of witnesses.
We thank you all for your testimony. It is most
enlightening, even if there is a little conflict here and there
among you, which is why you are all here.
So with that, we will start off with Jim Cicconi, who is
the senior executive vice president for external and
legislative affairs for AT&T. Mr. Cicconi, thank you for being
with us. And we look forward to hearing your comments.
STATEMENTS OF JAMES W. CICCONI, SENIOR EXECUTIVE VICE
PRESIDENT, EXTERNAL AND LEGISLATIVE AFFAIRS, AT&T, INC.; MARK
IANNUZZI, PRESIDENT, TELNET WORLDWIDE, INC.; HAROLD FELD,
SENIOR VICE PRESIDENT, PUBLIC KNOWLEDGE; JOHN D. BURKE,
COMMISSIONER, PUBLIC SERVICE BOARD, STATE OF VERMONT, ON BEHALF
OF THE NATIONAL ASSOCIATION OF REGULATORY UTILITY
COMMISSIONERS; AND RANDOLPH J. MAY, PRESIDENT AND FOUNDER, FREE
STATE FOUNDATION
STATEMENT OF JAMES W. CICCONI
Mr. Cicconi. Thank you, Chairman.
Mr. Walden. And we are still on an old wired copper
network, so if you could turn on that microphone.
Mr. Cicconi. Boy, that is embarrassing.
Anyway, Chairman Walden, Ranking Member Eshoo,
distinguished members of the subcommittee, thanks for the
opportunity to testify with you today, and thank you for
holding this hearing.
Four years ago, as you know, the FCC issued the National
Broadband Plan, as directed by you. That plan concluded that
bringing modern broadband services to all Americans is vital,
and that to do so we must have communications policies rooted
in the future, not the past.
In my testimony today, I want to focus on four key points
concerning this very important IP transformation. First,
transition to all-IP networks is happening today, and I think
the chart that you have up here demonstrates that. That is over
a 10-year period, and the smallest part of that at the end of
that is----
Ms. Eshoo. Is that chart for you to see or for us to see?
Mr. Cicconi. Well, I had hoped that the committee would
have it, but----
Mr. Walden. We got it covered. Go ahead.
Mr. Cicconi. And this is based on government data. But it
shows that by the end of this year, only about 25 percent of
Americans will actually be taking advantage of the legacy
wireline services. Three-quarters of Americans would have moved
to alternatives. The National Broadband Plan, I think,
recognizes that this IP transition is well under way. It is
happening today. And I posit that all my fellow panelists
recognize this as well.
Communications marketplace has changed dramatically, and so
has my company in response to that. Today we provide broadband
and communications services in robustly competitive markets
where consumers have an almost overwhelming array of choices.
And, believe me, they exercise those choices on a daily basis.
They, consumers and businesses, are abandoning the old circuit-
switched wireline network in droves and are moving to IP and
mobile services offered by a host of different providers. In
fact, it is estimated that what we lovingly call POTS, which is
``plain old telephone services,'' as I mentioned earlier and
the chart demonstrates, would be confined to only 25 percent of
U.S. households. In fact, in Florida and Michigan, two States
that are in our wireline footprint, only about 15 percent of
homes are still connected to the legacy wireline network today.
Second point: This transition to an all-IP network is a
good thing, and it should be embraced. This is a huge and
crucial undertaking for our country. We are replacing the
networks that served us well for 100 years with far more
advanced and capable networks, networks he hope will serve us
well for the next 100 years.
National Broadband Plan correctly concluded that these new
smart networks are vital to our Nation's economic development
and to maintaining our global competitiveness, but these
networks don't happen by themselves. They have to be built, and
to build them companies need the right incentives to invest.
Most important, companies must be able to retire old
infrastructure in order to make the investments in new
infrastructure, just like any other business would do. To do
otherwise makes little sense and would impede what the National
Broadband Plan rightly has made a national imperative.
Third point: We have the time to do this right. This is not
a flash cut. The transition to all-IP networks will take place
over the course of this decade, but we have to use that
timewisely. The FCC's Technical Advisory Committee suggested
that the old legacy networks be retired by 2018, but the FCC
should in any event set a date certain for their retirement. My
company believes it will actually take us until 2020 to
accomplish that, and even then it will require a maximum effort
on our part.
In the meantime, we have asked the FCC to conduct
industrywide trials. In our case, we suggested converting two
pilot wire centers out of some 4,700 wire centers in our
footprint to all-IP. We feel trials are critical. As careful as
our planning is, no one can anticipate every issue that may
arise when we actually transition off the legacy wireline
infrastructure. Trials will help us learn while we still have a
safety net in place, and as we learn, all of us, industry,
government, customers, and stakeholders, can then work together
over the coming years to address any problems we find.
This leads to my final point, which is the importance of an
overall framework of values and principles to guide us during
this transition to all-IP networks. In that regard some of our
friends in the public interest community, including one of my
colleagues on the panel here today, have, I think, served us
very well. They have stressed that this transition from the old
to the new should consider things we have all come to see as
fundamental: universal connectivity, consumer protection,
reliability, public safety, interconnection.
We know that an all-IP world will not be a regulatory-free
zone, nor are we seeking that, but we do feel that any
regulation should be rooted in the problems of today, not the
problems of a bygone era.
Regulations should also recognize and give deference to the
choices of consumers in what are now highly competitive markets
and treat all providers equally regardless of technology or
their company's lineage.
This is not the first time the U.S. has helped plan for
that communications transition. As noted by the National
Broadband Plan, we will need wise government policies to ensure
that legacy regulations do not impede the investments our
country needs, and that the interests of consumers are
protected as these new technologies are deployed.
Thank you again for holding this hearing today, and I will
look forward to your questions.
[The prepared statement of Mr. Cicconi follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Mr. Cicconi, thank you for your testimony. We
appreciate your participation in the hearing.
We will now go to Mark Iannuzzi, who is president of TelNet
Worldwide. We are thankful that you are here today to represent
the industry and yourself. And please turn on that microphone,
pull it up close, and we will--look forward to your comments as
well, sir. Thank you for joining us.
STATEMENT OF MARK IANNUZZI
Mr. Iannuzzi. Chairman Walden, Chairman Upton, Ranking
Member Eshoo, Ranking Member Waxman, and to each of the members
of the committee, thank you very much for an opportunity to
speak to you today. I am Mark Iannuzzi. I am president and
founder of TelNet Worldwide. We are a competitive facilities-
based carrier providing telecommunications and broadband
services. We are headquartered in Troy, Michigan. We are also
very privileged and proud to be the communications service
provider to Chairman Upton's district offices in Kalamazoo and
St. Joseph/Benton Harbor, Michigan.
TelNet offers the complete range of essential
communications services for small to middle-size businesses,
including classic voice, IP telephony, hosted IP applications,
and advanced data and networking services. In this increasingly
connected world, we help unify and simplify all the ways that
businesses communicate and collaborate, providing them big-
business solutions to small businesses at prices that they can
afford.
Today I am pleased to appear on behalf of COMPTEL. It is
the Competitive Communications Association. Nearly two-thirds
of the COMPTEL members are small and middle-size businesses, a
majority of which have $10 million or less in revenues and
fewer than 100 employees. However, the DNA of these companies
is about entrepreneurs serving entrepreneurs.
A little background about myself. I was born and raised in
Detroit. I am an American engineer and entrepreneur. I built
TelNet with my brothers 15 years ago from the dirt out of the
basement of our home. To this day, though, however, since that
time, we have invested upward of $100 million, employing now
over 100 career associates in our company, and we also are very
proud to have created the first network in the State of
Michigan which integrates the vast majority of the State with a
service area greater than AT&T and Frontier combined.
One of the things that is indelible upon me was a
conversation I had with my father when I was about 5 years old
when I had to do a book report on poverty. I asked my father,
``What is poverty?'' And my father paused, and he told me it
is--``Poverty is about persons without choice.'' Now, at 10
years old, I didn't quite grasp what that meant because I
thought it was all about not having a lot of money. But it was
his pride of being an Italian immigrant, a U.S. citizen, to be
a part of this great land of opportunity, that he had choice
for himself and our family.
So with that as a backdrop, I want to make it clear that as
we have these debates, I or the competitive community, we are
not against AT&T, we are not against the ILECs. AT&T is a proud
American company. We want all companies to do well. It is in
our interests. When they raise themselves, they raise the
entire industry, and we have the ability to serve customers
better. So it is not about what we are against; it is about
what we are for.
We are for robust competition, for merit over might, for
much as things change in this technological age, some things
never change, one of which is the enduring truth of free-
functioning, competitive markets to bring about the greatest
good for the widest array of people the world has ever seen.
We are for the rule of law, which means trust. It means
certainty in keeping our collective promises, including those
to the capital markets which have invested theirselves in our
endeavors.
And, finally, we are for ensuring that there are no
artificial barriers to progress not only for those of us who
are currently in the market today, but for all those who are
yet to be born who will take up the mantle that we have set
forth.
So let us begin from the--let us start at the beginning,
the 1996 act. The 1996 act unleashed the greatest advancements
in communication history since the history of history.
Improvements to our capabilities today in terms of the
capabilities, the competitive position and the productivity in
this country are mind-boggling. And to that extent, I would
like to extend my sincere salute to Chairman Upton, to
Congressman Dingell and all the Members here who were
participatory in that '96 act because your leadership was
instrumental in forging a bipartisan team for this landmark
legislation which has revolutionized the industry of
communications.
At the very soul of that act, the very soul was designed
specifically to open up competition, including the ability for
the incumbent dominant companies to expand their service
offerings, and they have done very well. They entered the LD
market and ultimately the Baby Bells bought Ma Bell.
Now, there are some here that would say that there are
technical limitations in the act. I say to them as I say to
you, the act is not and cannot be about technological
limitations. It is rather about technology inspiration through
a simple framework for free-functioning, competitive markets to
exist.
Why this matters. We understand small businesses, I
believe, and that is why TelNet came into being. This is where
we thrive. Small businesses seek to be relevant in what they
do, not necessarily experts in technology. Small businesses
cannot afford to go out and pay for the consultants to sort out
the alphabet soup of technology. Rather, it is often where it
is their next-door neighbor's nephew's cousin that comes in and
tries to help them figure out some of the things going on here.
The competitive industry can touch these small businesses.
We sit across the table, we examine their needs, we establish
solutions tailored to those needs and help them go from crawl,
walking, to run. You know, God bless them, but this is not the
AT&T's forte. Our goal, in fact our promise, to our customer is
to be the last service provider that they ever need, because we
want them for life. We do--to do this, we must ensure that we
can futureproof their investments and deliver ongoing value.
So let us get to the heart of the matter. There are three
things that are key to what this conversation here about the
next-generation networks. The last mile is the essential
business building block for function and competitive markets,
regardless of technology. Our network is the best in the world,
but it is only at good as its weakest link, and that is last
mile.
It is--secondly, it is important that these networks are
interconnected, that we can exchange traffic at just and
reasonable rates and our terms and conditions regardless of
technology.
And, third, we need to make sure that the business
agreements and pricing between the dominant and competitive--
pair are negotiated and adjudicated with the firewall backstop
of our local public utilities commissions.
Mr. Walden. Mr. Iannuzzi, I am going to have you wrap up.
You are about 2 \1/2\ minutes over.
Mr. Iannuzzi. Thank you.
In conclusion, I came into this business 15 years ago with
a driving desire to make things better, to make things less
expensive through business process improvement and technology
advancement. If I ever had any doubt that there was a--going to
be a technological limitation in a tech business, that would
have been a nonstarter.
The TelNets of the world may come and go, but should
never--must never perish from this great Nation is that we do
not erect barriers which impoverish, but we stay true to our
competitive spirit as Americans for those ingredients that
promote prosperity and well-being for all.
Thank you very much for the opportunity to testify today.
[The prepared statement of Mr. Iannuzzi follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Mr. Iannuzzi, thank you for your comments, and
we appreciate your testimony.
We will go now to Harold Feld, who is the senior vice
president of Public Knowledge. We welcome you back before our
subcommittee, and we look forward to your summary of your
testimony as well. Mr. Feld, go ahead.
STATEMENT OF HAROLD FELD
Mr. Feld. Thank you. Chairman Walden, Ranking Member Eshoo,
thank you for inviting me to testify today.
The transition of our wireline networks to Internet
Protocol-based services is a tremendous opportunity for our
Nation, but we must make sure the transition results in an
actual upgrade in technology without a downgrade in the
services upon which Americans depend.
For decades our country has used the reasonable rules based
on fundamental principles to build a phone network that became
the envy of the world. We are the country that brought a phone
to every farm, the country that built a network you count on.
We accomplished this by moving certain fundamental values with
us as our networks evolved. As we now face the opportunities
and challenges of implementing the next generation of
communications technology, we must continue to leave no one
behind.
Americans are so used to relying on the protections of the
phone network, they often don't even notice them. We conduct
our business and personal communications as if we can always
trust the phone network will just work, because it has. During
emergencies we can always call for help from police,
firefighters and hospitals. When someone calls a friend on
another phone network, that call will always go through,
regardless of which carriers they subscribe to or where they
live.
In the rare instance that any part of the system breaks
down, government authorities at the local, State, and Federal
levels move swiftly to act as if our lives depended on it,
because they do.
Every one of these benefits is the result of deliberate
policy choices that serve specific basic values. Our phone
network became the envy of the world because our policymakers
valued what Public Knowledge calls the five fundamental
principles: One, service to all Americans; two, competition and
interconnection; three, consumer protection; four, network
reliability; and, five, public safety.
There are some who believe the IP transition should be a
glidepath to eliminate FCC oversight, but as carriers begin the
transition, we have concrete examples that many of the
essential services we take for granted are at risk in rural and
not so rural areas, for individuals and for small businesses.
One of the worst problems is the continuing inability of rural
residents to receive telephone calls reliably. As carriers
switch to IP technology, they can route calls through least-
cost router systems, creating latency, and sometimes trapping
calls in perpetual loops. In a world where we simply allow the
marketplace to work, this doesn't get fixed. As one carrier
told the complaining subscriber, due to living in a rural area,
you will experience service issues.
The FCC will address this at the open meeting next Monday,
but in a world where the FCC could only regulate based on
market power or in response to unfair or deceptive practices,
as some have urged, rural America would be out of luck.
Which brings me to my larger point: IP technology brings
the potential for new services, but it also brings the
potential for new ways to crash the system. IP doesn't work
with a lot of legacy equipment or services. It brings in all of
the cybersecurity issues, like malware and cyber attacks,
without any of the existing defenses. I am not alone in
worrying that things could go very wrong. The Department of
Defense and the Federal Aviation Administration have both filed
with the FCC to express concerns that the IP transition, if not
handled properly, could interfere with vital government
operations.
As with rural call completion, we may find we actually need
the FCC to use its legacy authority to solve these problems.
Rather than thinking of the FCC as an obstacle that stands in
the way, we should think of it as our last defense against the
total train wreck, because at the end of the day, the measure
of success for the transition will not be how many regulations
did you kill, but does the phone network still work for
everyone.
For all these reasons, I am very glad to hear Jim Cicconi
acknowledge the importance of doing this right, of avoiding any
kind of flash cut that could cause major disruption, and for
acknowledging this will not be a regulatory-free zone. To
everyone's surprise, Public Knowledge and AT&T agree on a lot
because we want the same thing: a competitive, modern network
for all Americans. Unfortunately we still debate this as if we
were for or against upgrading our phone system or even for or
against AT&T.
This is absurd. We want AT&T and every other carrier to
invest in its network. No one is seriously suggesting that AT&T
or any other carrier should preserve copper to the end of time.
While we will fiercely disagree on how to make this work, we
all want to make this work, and we know that the stakes are
high.
Most importantly, we need to stop thinking of this as
AT&T's transition, where AT&T proposes something, and everyone
else reacts. We need to plan out a transition that reflects our
values. This is the transition of the phone system of the
United States of America on which 300 million people depend
every single day. We need to recognize we all have a shared
benefit from making this network reach everyone, and therefore
a shared responsibility to make it work for everyone.
Thank you.
[The prepared statement of Mr. Feld follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Thank you, Mr. Feld.
Maybe we can create a government Web site they could all
work through. Never mind. Just kidding.
Mr. Feld. We all learn from our mistakes.
Mr. Walden. Yes, hopefully.
We go now to Mr. John Burke, who is back before our
subcommittee. We appreciate your participation. He is a Board
member and Public Service Board of the State of Vermont. Mr.
Burke, we are delighted to have you here again, and thanks for
your testimony. And please go ahead.
STATEMENT OF JOHN D. BURKE
Mr. Burke. Thank you, Mr. Chairman, and Ranking Member
Eshoo, and members of the subcommittee. Thank you for allowing
me to testify on the topic of IP transition.
In recent months, under Acting Chairwoman Clyburn, the FCC
has greatly increased its interaction with the States. We are
particularly pleased with the outreach from the internal FCC
task force to NARUC's own Federalism Task Force. Chairwoman
Clyburn is to be applauded for her leadership and for her
outreach.
In my home State of the Vermont, we face many challenges.
Very little fiber is being deployed to the home, and there are
many areas without broadband access. There is limited
competition even in urban areas. Wireless coverage leaves much
to be desired even where it exists. And yet, even in Vermont,
transition to the IP-based voice network is occurring. In this
latest evolution, which has been under way for quite a few
years now, networks are migrating away from circuit-switched
voice and data services to IP-based services.
During the transition, like the previous ones, it is
crucial for policymakers to focus on the right issues. No
regulator or legislator should intervene in the market to put a
thumb on the scale in favor of one technology over another. The
market should make those choices.
The reason public service commissions and agencies like the
FCC were created and regulate remains the same. First, we
regulate where competition is not vigorous enough to adequately
protect consumers. Secondly, we intervene to impose public-
interest obligations.
Regardless of the level of competition, some oversight will
always be necessary to provide what the market will not,
including consumer protection, local number portability,
interconnection, prioritization of service restoration, 911
service, disabled access, and universal service.
The AT&T requests for the wire center trials raises some
questions of why trials are needed now. The AT&T--AT&T and
other providers have no significant problems rolling out IP-
based service today. The transition is well under way, and
major reason why issues remain is because the FCC has focused
on the wrong issues.
The transition is not about regulation or deregulation. The
FCC has ample tools in the 1996 act to eliminate unneeded
regulation. Nor should the debate be technology-focused.
Congress established a technology-neutral framework in the 1996
act and incorporated the core values of consumer protection,
universal service, and competition. The FCC should just follow
this framework, but for over 10 years the agency has followed
what Congress has set out, but not in exact terms. Instead the
agency has been unable, under both Democratic and Republican
Chairmen, to provide needed certainty by classifying VoIP
services either as a telecommunications service or as an
information service, which has undermined the communications
market.
Leaving this question unresolved has created the regulatory
arbitrage that undermined intercarrier compensation system and
is at the reason and the very base for the call-completion
problems Mr. Feld mentioned. It has also left some consumers
who chose IP-based services with fewer protections than they
might have had with the circuit-switched service, despite voice
services being exactly the same from a consumer's point of
view.
The States and industries stakeholders continue to waste
significant resources at ultimate expense of taxpayers and
ratepayers on proceedings that would be unnecessary if the FCC
acted.
The FCC-blessed real-world VoIP interconnection trials will
not necessarily help the Commission clarify the statutory basis
for the incumbent LEC's duty to provide VoIP interconnection.
The clarification begins and ends with an interpretation of the
States--of the statute.
There is no question that the interconnection is
technically feasible. AT&T and Verizon manage that on a daily
basis on their own networks. Rather than inventing new legal
theories with no statutory support specifically to avoid
classifying VoIP telephony, as the FCC did in the November 2011
transformation order, the agency should just classify the
service.
Oversight of VoIP services has absolutely nothing to do
with either the Internet or peering arrangements. Verizon and
AT&T assure their customers that their VoIP services are not
Internet services on their Web sites daily.
If the FCC continues along to consider technology trials,
Congress should encourage the agency to first seek the benefit
of a fact-based recommendation from an adequately funded
Federal-State-USF joint board. Any proposed trials can only
benefit from the significant State involvement.
In conclusion, while technologies change, the expectations
of our consumers do not. Consumers expect the same level of
service and protections they have been accustomed to, and it is
up to us all to ensure that those expectations continue to be
met.
Thank you for your attention. I look forward to your
questions.
[The prepared statement of Mr. Burke follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Thank you very much, Mr. Burke. We appreciate
your counsel today.
We will go now to our final witness on this panel, Mr.
Randolph May, who is president and founder of Free State
Foundation. Mr. May, it is good to have you back, and we look
forward to your comments as well.
STATEMENT OF RANDOLPH J. MAY
Mr. May. Chairman Walden, Ranking Member Eshoo, and
distinguished members of the committee, thank you for inviting
me to testify. I am president of Free State Foundation, a
nonpartisan, free-market-oriented think tank that focuses its
work primarily in the communications policy area. I have been
involved for 35 years in communications policy in various
capacities, including having served as Associate General
Counsel at the FCC.
I appreciated the opportunity to testify in July before
this committee regarding FCC process reform. That hearing was
very important, but, frankly, the topic at this hearing may be
even more important. As the transition away from narrowband
communications services to digital broadband services
continues, the fundamental question confronting policymakers is
this: Will the existing public-utility-style framework that
still largely governs communication service providers be
replaced by a free-market-oriented paradigm that accelerates
the ongoing broadband digital transition; or, instead, will the
regulatory framework be an impediment to progress?
The answer has important implications for the Nation's
economic and social well-being because there is widespread
agreement that the transition to IP services, which
indisputably is leading to dramatic marketplace changes, will
be completed at some point. And there is also widespread
agreement that completion of the transition is a positive good,
because IP-based services provide consumers with more
functionalities in less costly ways than do copper-based TDM
services.
There is no doubt that the digital revolution has enabled
increasing competition among broadband providers for the
provision of voice, high-speed data, and video services,
whether these providers offer their services over wireline,
cable, wireless, satellite, fiber, or whatever technology. The
relevant point is not that all of the services offered by all
of the competitors are perfectly substitutable, or that they
meet every consumer's desire at all times. The relevant point
for policymakers is that for an increasingly large number of
consumers, these various competitors provide a choice of
service providers offering a choice of attractive service
options.
Note that I said above the IP transition almost certainly
will be completed at some point in time, but the FCC's actions,
and possibly Congress's, too, will affect the timing of the
transition's completion and whether the regulatory regime that
emerges is a proper one going forward.
My testimony explains why, in order to benefit consumers
and in order to promote investment in new networks and
innovation, the legacy regulatory framework, which is based on
assumptions of a monopolistic marketplace that no longer
exists, should be replaced in a timely fashion by a free-
market-oriented model. Requiring telecom companies to continue
to maintain their TDM networks past when they are economically
viable drains investment dollars from deployment for new IP
networks, and economists agree that burdening any service
provider, regardless of the platform used, with unnecessary
costly regulation does deter investment and innovation. So in
the IP world, the FCC's regulatory intervention should be tied
closely to findings of market failure and consumer harm.
The FCC may well possess the authority under the
Communications Act to implement most of the regulatory changes
necessary to facilitate completion of the digital transition,
while at the same time safeguarding certain basic public safety
and universal service interests, which I recognize are
important interests to be safeguarded, but to the extent such
authority either is lacking, or the FCC fails to properly
exercise such authority in a timely fashion, then Congress
should be ready to step in.
For example, Congressman Latta's recently introduced bill,
H.R. 2649, which requires the FCC to presume forbearance relief
should be granted absent clear and convincing evidence to the
contrary, would be a useful tool in enabling the agency to act
more quickly, especially if forbearance relief is made
available for all entities subject to the Commission's
jurisdiction, as I think it should be.
In any event, aside from any near-term legislation that may
be desirable to ensure the benefits resulting from the digital
revolution are fully realized, ultimately Congress should adopt
a comprehensive overhaul of the current Communications Act
along the lines of the Digital Age Communications Act model
that I have long advocated, and which I describe in my
testimony.
Finally, Mr. Chairman, I mentioned I served as Associate
General Counsel at the FCC. That was in the late 1970s and
early 1980s under the Carter administration. At that time
traditional economic regulation of the various transportation
markets was largely eliminated, and this deregulation initiated
by President Carter's administration was accomplished on a
mostly bipartisan basis, and the Congress and the agencies
cooperated productively. The agencies generally initiated
deregulatory changes through the administrative process, while
Congress engaged in oversight. And Congress eventually
legislated to put in place deregulatory regimes that relied for
the most part on marketplace competition rather than regulation
to protect consumers. I believe that a similar opportunity for
positive change now exists.
Again, thank you for inviting me to testify today, and I
will be pleased to answer your questions.
[The prepared statement of Mr. May follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Mr. May, thank you. And thanks for your in-
depth testimony, which we all have.
I am going to start off with questions. And, Mr. Iannuzzi,
in your testimony you said, and I quote, the prepared
testimony, ``As incumbents replace their legacy TDM-based
technology with IP technology, competitive carriers will lose
access to the last-mile connections that have enabled them to
push deployment of innovative business broadband services to
American businesses.'' That is kind of the crux of the argument
you represent today, correct, that if they abandon--if AT&T or
other companies abandon their copper networks, then you are not
going to have the ability to get to that last mile, correct?
Mr. Iannuzzi. Correct.
Mr. Walden. Now, Mr. Cicconi, from your perspective, what
does that mean in terms of--is that accurate? Will you--will
AT&T and other companies still make last-mile connection
available? And then I want to go to Mr. May on this as well.
And again, hit that microphone button, if you would.
Mr. Cicconi. Short answer is of course we would make them
available, and there is nothing we have proposed that would
take that away.
Mr. Walden. Under the same interconnection, reasonable
rates, terms and conditions?
Mr. Cicconi. I think if we are talking about copper loops,
you know, there is nothing in our proposal that would change
the treatment of that as a ``uni.''
Mr. Walden. But in terms of an advanced network, fiber?
Mr. Cicconi. I think when you are talking about, you know,
Ethernet, for example, the FCC has concluded the Ethernet is a
competitive service. So I think if we are rolling out Ethernet
services in replacement for TDM facilities--you know, and to
give you the sense of that, a TDM facility is not classed as a
broadband-level facility by the FCC currently. So for placing
TDM with a broadband facility, for example, and backhaul to a
cell tower, you know, I think the FCC has concluded Ethernet
is, in fact, very competitive.
And I think, you know--in fact, I think Sprint CTO just
stated recently that for the same price he pays for a T-1 to a
cell tower, he can get 20 times the capacity by running
Ethernet to the same cell tower. And so, obviously, if it is a
competitive market, we wouldn't feel that regulation, per se,
is needed in that area in order to provide an alternative
capacity.
Mr. Walden. All right. Mr. Burke, what is your reaction to
all of that?
Mr. Burke. Well, I think that one of the things you look at
when you look at the potential for interconnection is that
there are supposed to be agreements. The idea is that they are
supposed to agree. That doesn't necessarily mean that all the
players have an equal bargaining power. It doesn't always work
that way. If that is the case, it may well be necessary for
somebody to take a look at those agreements. And the 1996 act
clearly said, and wisely so, in my estimation, the States can
look at that and arbitrate that. And it also defined the
service to include advanced services.
So 1996 actually had--in my estimation, had it right and
gave a methodology so you would be able to handle arbitration
of these issues if, in fact, Mr. Cicconi and Mark couldn't
agree. And I think that is another point that exists in the
States' position here and what they would have to do in this
brave new world moving forward.
Mr. Walden. All right. Mr. May, from your perspective?
Mr. May. Thank you, Mr. Chairman.
I think part of the premise of your question was based on
the continuation of offering of copper-based loops from Mr.
Iannuzzi.
Mr. Walden. Well, and just the ability, regardless of the
underlying infrastructure, to have a competitive marketplace
for these alternative competitors.
Mr. May. Right. You know, there is a transition going on,
which is why you called the hearing.
Mr. Walden. Right.
Mr. May. You know, from my perspective, over time, as I
said in my oral testimony, it is important that we not require
the maintenance by regulatory fiat of older technologies that
are less efficient and more costly. So eventually--I am not in
favor of requiring AT&T or anyone else to maintain in existence
a technology in a competitive environment that we are moving to
that is not efficient.
But I want to say one other thing, if I could. In Mr.
Iannuzzi's testimony, he is talking both about the ability to
access facilities of others and to use those last-mile
facilities, and he is also talking about interconnection of
facilities. And as we talk about this today, those are really--
they are actually two different things. In 251 and 252, without
getting too technical, they involve both of those things. And,
from my perspective, in terms of where public policy wants to
go, I am much--I am more receptive to arguments that have some
regulatory backstop for interconnection, saying, you know, I
have to interconnect my network with Mr. Burke's network or Mr.
Cicconi's, than I am about regulation which continues to
require that if I build a facility, that I have to provide
access under regulated terms and prices, you know, ad infinitum
for someone else to use those facilities.
And the simple reason, and this is important, I think, to
understand, is when you require that type of sharing of
facilities and access that he talks about, and he does say he
has some facilities of his own, but----
Mr. Walden. Right.
Mr. May [continuing]. When you do that, it discourages
either him from building his own facilities, or it discourages
me, if I am the one that has to provide access, from actually
investing more to build more facilities.
Mr. Walden. All right. My time has expired. And I now turn
to the gentlelady from California Ms. Eshoo for 5 minutes.
Ms. Eshoo. Thank you, Mr. Chairman. And thank you to all
the witnesses.
We will start over here with the Italian part of the table,
who don't agree with each other despite their shared background
ethnically.
Mr. Cicconi, you stated in your testimony that modern IP
networks are both more dynamic and cost-efficient than the TDM-
based voice telephone networks that we have depended on over
the last century.
How does a new network technology change the state of
competition? Because I think that that really goes to the heart
of a lot of what we are talking about here and some of the
testimony that we have heard from others.
In your view, shouldn't the--the rules to preserve and
promote competition be technology neutral? I mean, I have
always favored technology being neutral in whatever legislation
we do. It has always been something that I thought was like a
hot stove; don't go and touch it. It should be neutral.
Mr. Cicconi. Well, first of all, I don't think the Telecom
Act itself makes the rules technology neutral. It put most of
those rules in Title 2, which is entitled common carriage, and
it doesn't apply to our wireless service. In fact, you have an
expressed provision in Title 3 that it can't be applied to
wireless service. It doesn't apply to cable. It applies
uniquely to the wireline TDM services provided by a legacy
wireline carrier.
So they are not technology neutral in that sense. They are
uniquely imposed on this part of the business. And as you saw
from the chart earlier, it is a declining part of the business.
At the current time AT&T has fewer than 14 million customers
using traditional wireline services. By contrast, the number
four wireless carrier has double that.
So I would argue that today these services are competitive,
Congresswoman, and that you all when you wrote the act--or
rewrote the act--in 1996 I think did something fairly unique. I
think you recognized in there that there were major
transformations that were underway and that I think augured
well for competition, and you gave the FCC some fairly unique
powers there----
Ms. Eshoo. So are you agreeing that the rules going forward
should promote competition, but you don't agree they should be
technology neutral?
Mr. Cicconi. I certainly would argue that it is an
appropriate mission for the FCC to continue doing, but I would
disagree that all the rules that were needed in 1996 and 1934--
--
Ms. Eshoo. We are not in my office. I have to get to Mr.
Iannuzzi, OK? Thank you.
Mr. Iannuzzi, you gave great testimony. I loved what you
said. And it is uncommon for people to come here and speak
about what their father said, how that remained with you, what
you do, what you are for. It is not what you are against, but
where you want to go and why. And I just think you gave
terrific testimony.
Without a regulatory backstop, what incentive do you think
that the largest incumbent providers have to reach a commercial
interconnection agreement with you?
Mr. Iannuzzi. Thank you very much, Congresswoman, for your
kind remarks.
Ms. Eshoo. Turn the microphone on so everybody can hear you
say, thank you for your kind words, Congresswoman.
Mr. Iannuzzi. When I got my CLEC license they asked me
three questions. One was do you have the technical acumen, do
you have the financial wherewithal, do you have the business
know-how. I would have flunked that test if I was going to go
into a business to compete against an 800-pound gorilla without
some type of firewall, some type of framework that allowed a
competitive marketplace to exist. Because our ability to go and
negotiate a commercial agreement, the incentives, just
economics 101 concepts here, the economic incentives of the
incumbent provider, they control the connectivity to the
customer. It is in their interest not to provide connectivity
to other people because they would like to keep that customer.
So without that firewall there to make sure that we did have
fair and equitable access to the customer, the business case
would fall. It would just not be there.
Ms. Eshoo. Thank you very much. I think I am out of time.
Thank you.
I will submit the rest of my questions for the record. I do
have them for Mr. Feld and other witnesses. Thank you.
Mr. Walden. We will now go to Mr. Barton for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman.
Last weekend I finally got to go home to Texas after the
government shutdown. And I hadn't been there. It is the first
time in the 29 years I have been in the Congress that I had
spent two consecutive weekends in Washington, DC. So obviously
I was glad to get home. And when I got home I walked into my
house and decided to make a phone call and I didn't have a dial
tone. And the phone was provided by AT&T, a legacy carrier.
So I got the phonebook out and I went through the protocol
on page 9, you know, dial 1-800 and we will be happy to help
you, and said, now, if the problem is on your phone in the
house, it is 99 bucks. If it is not, we will come out and fix
it for free.
So, anyway, I went through that and I finally self-reported
a problem and I did all the things you are supposed to do, and
they called back and said we will be out tomorrow by 8 p.m.
Well, the next day by 8 p.m. they weren't out. So I picked up
my cell phone, which was provided by Verizon, and called and
hit OOO and I finally got a sweet lady in Houston, Texas, and I
said my phone is not working in my home and I still haven't got
the serviceman, and she agreed with me and she said, we will be
here tomorrow. And, by golly, they were, and they fixed it.
Boom. And the guy could not have been nicer. Could not have
been nicer. But the moral of that story is I had to use a
wireless provider to get my hard line phone fixed.
In 1996 CLECs, they were competitive, and we wanted the
CLECs to compete with the ILECs, the incumbents. Now, since
1996 my congressional district has changed four times, but we
are still operating under rules that we put in place for an old
system. And it is time, just like our congressional districts
change every 10 years--in the case of Texas we changed 2 times
in addition to those 10-year changes--we really need to relook
at this. And I love AT&T and I love Verizon and I love the
CLECs and all the independents out there, but what I really
love is consumer choice and market efficiency and competition
that works.
So my question to Mr. Cicconi, who I have known since way
back when, even before I was a Congressman I knew Jim, would
the group that you represent guarantee access if we did away
with some of the regulatory protections under Title 2?
Mr. Cicconi. Well, first, Congressman, I am sorry for your
service problems.
Mr. Barton. Well, we have had rain problems.
Mr. Cicconi. But I think you made an important point, and
that is there are alternatives out there and wireless has
become an alternative for wireline phone service, and there are
many, many competitive carriers offering wireless services.
Cable offers phone service today, I am not sure in your area or
not. But there are an array of choices out there. And so I
think that consumers have those choices today.
Now, is it a legitimate function of government to ensure
that everybody is connected and has the ability to communicate?
Absolutely. Our company has always stood behind the principle
of universal service, and I think that is an important function
of the government, to ensure that the choices are there and
that they are available to all Americans.
Mr. Barton. Well, to the average consumer, a consumer
doesn't care whether they are serviced by an ILEC or a CLEC.
What they want is service. What they want is something that
works, that is efficient, and that is cost competitive. So our
job on the committee is not to protect an existing market
segment. Our job is to do the very best we can to give our
consumers choices.
And I want the CLECs to stay in business. I am not anti-
CLEC. What we passed in 1996, it might have worked for 1996,
but that world doesn't exist today, so let's figure out what
exists today and in the future and go that way.
And with that, Mr. Chairman, thank you for the hearing and
I yield back.
Mr. Walden. The gentleman yields back.
We turn now to the gentleman from California, Mr. Waxman.
Mr. Waxman. Thank you, Mr. Chairman.
Based on some of the testimony we heard today, one might
think that we are evaluating a new network being built across
the country, an IP network that runs on fiber lines and
wireless airwaves. Others suggest that this is no new network,
but that new electronics that have been added to the copper and
fiber infrastructure that has been transporting voice and data
throughout the country for years.
Why are these distinctions important? If what we really
care about are basic values like protecting consumers and
competition, universal service and public safety, why does it
matter what kind of infrastructure communications runs over?
Mr. Feld, it is my understanding that Google is currently
planning to offer extremely fast Internet access over new fiber
networks being deployed in three communities. Although
consumers can sign up for video service to complement their
Internet access service, Google is not offering a voice
product. Google has not been shy about stating that it is not
offering voice at least in part due to the complex rules
associated with providing telephone service.
What do you think of Google's argument that a company like
Google be saddled with regulations if it decided to add voice
to its video and broadband offering?
Mr. Feld. I think that there are a couple of points that
need to be very clear. First is that when Google talks about
the regulations that they found too burdensome, they are not
talking about the 251/252 kind of regulations that have been
the focus of the debate here. They are talking about the things
that we all agree ought to stay in system, like 911, like
consumer protection and privacy protections, all of these
things that we have said, yes, that is very important.
Mr. Waxman. Well, what are they talking about? Give me
examples of what they are concerned about?
Mr. Feld. Well, it is expensive to maintain the 911 system.
It is expensive to contribute to the Universal Service Fund
system to ensure that all Americans are connected.
Now, we believe that it is very important to maintain these
things. We believe that it is very important. Google likes to
collect the information of the people who use its services.
They aggregate it. They have one level of privacy protection
for that. Their business model is based on a couple of
different things.
In the phone world we treat this very differently and you
cannot treat phone call information the same way that you would
treat a Facebook status update, that people hold that very
closely. And I understand for Google to say we don't want to
get into that business. But if we were to say, well, OK, we
want to encourage Google to get into this business so we want
to eliminate these kind of vital consumer protections, I think
that would be a very grave mistake.
Mr. Waxman. So even if they choose not to offer telephone
service, that doesn't lead you to the conclusion that we ought
to eliminate the rules for all telephone services.
Mr. Feld. Oh, not at all. And, in fact, I would point out
any business looking to enter a market figures out what the
tradeoff is and what their business model is. We have a thing
that is very valuable in a network that goes everywhere and
uses telephone numbers. And I will point out that when we have
companies that are VoIP providers, pure VoIP providers that
want to use those telephone numbers, we impose certain
obligations on them already, and businesses make the evaluation
of whether the benefits of getting into that business are worth
the expense.
Mr. Waxman. That is their decision for themselves.
Mr. Feld. Yes.
Mr. Waxman. Now, for the rest of public policy and for
everybody else, given the importance and complexity of
transitioning voice services to an all-IP network, wouldn't it
make sense to have a trial overseen by the FCC to help collect
data based on real world experience and challenges? This past
May the FCC issued a public notice seeking comment on trials
related to the IP transition. Then Chairman Julius Genachowski
stated at the time, quote, ``Trials are a smart approach that
the FCC has deployed before.''
In the public notice the FCC invited carriers interested in
pursuing a geographic trial, like AT&T, and they proposed to
submit a more detailed, comprehensive plan, including the
design of the trial, that data that would be collected, the
rules that would need to be waived, and the role of the States
and the tribes. It seems to me that the FCC is approaching this
issue methodically and thoughtfully.
So let me ask in the short time I have left to anybody on
the panel that wants to jump in on this, do you believe that
the FCC is moving ahead in a diligent and responsible manner in
exploring potential trials on the IP transition? And if you
don't, what would you do differently?
Mr. Feld. I would say that, yes, I think the FCC is
behaving exactly appropriately. They have invited further
comment. I think that we cannot treat conversion of an entire
wire center as something----
Mr. Waxman. Let me hear if there is somebody with a
contrary position? Mr. Cicconi?
Mr. Cicconi. I don't think I would be directly contrary.
But I think there are a couple fundamental points here. I
think, first of all, when the FCC put out its additional
questions, I think we all recognized that the FCC was going
through the leadership change from the former chairman to a
chairman not yet confirmed by the Senate, and I don't think,
honestly, Chairman Waxman, they were prepared yet to answer the
question.
But I don't think they should be leaving open the question
of whether we should have trials. I think when we filed the
petition almost a year ago we asked them to actually set up the
trials. This isn't an AT&T project. As somebody said earlier,
it involves government, it involves the entire industry, and it
involves consumers and stakeholders, and it shouldn't be up to
AT&T to come up with the plan. We actually proposed industry-
wide trials to the FCC that the FCC would actually help put
together in a collaborative way working with everybody.
And so I think they have at least to this point punted on
that decision. I don't think not having trials is an acceptable
answer because I think it would in essence be the government
saying, we are not going to plan for this. And when you did the
DTV transition----
Mr. Waxman. Your point is the trials are not methodical and
they are not fully thought through?
Mr. Cicconi. Right. The FCC actually planned the DTV
transition, conducted the trials, learned from them, and it
went fairly smoothly, and I think that is what needs to happen
here and that is what I still am very hopeful will happen.
Mr. Waxman. Thank you.
My time has expired. It is up to the chairman if you want
to let anybody else respond.
Mr. Iannuzzi. May I comment please?
Mr. Walden. Mr. Iannuzzi, real quick.
Mr. Iannuzzi. With all due respect, the concept of a trial,
in my opinion, is a boondoggle. The reason behind it is that we
do IP all over the place today in interior of networks and how
we connect with other cooperative parties. We have got smart
people. We know how to do this stuff right now. We are losing
ground in terms--do you want to try to make the revolution of
IP even more profound? Then let's get going with it.
Are there things that we have to attend to, to tweak stuff?
Sure. But in terms of the mechanics of it, it is making it
sound like water is hard, if you want to make it seem
complicated. You could take anything and make it sound more
difficult. It is done today all over the place.
Mr. Walden. All right. We are going to have to move on. We
go now to Mr. Latta for 5 minutes.
Mr. Latta. Thank you, Mr. Chairman. Again, thanks very much
for holding the hearing today.
And thanks to everyone who is testifying today. We really
appreciate hearing your testimony.
If I could start with Mr. Cicconi, if I may. As the
gentleman from Vermont mentioned, he and I have worked on
different issues, especially concerning rural call completion.
It is big for both of us. And I have a very unique district. I
go from urban to suburban to very rural. And one of the things
that--I have met with a lot of my rural telecoms out there, is
that they have had problems with dropped calls. This is a
serious issue for folks out there, because again if you have
family members that are elderly and you are trying to call them
and all of a sudden they are not picking up that phone, then
your next recourse is you call the local law enforcement or the
fire department, hey, can you go out and check on a family
member.
In the same way it really hits small businesses or any
businesses out in these areas, because again I have a lot of
businesses that are located way out and all of a sudden if all
of their calls are getting dropped, if somebody can't make that
call they lose business and pretty soon they are out of
business. So as we are looking at what is happening out there,
as the networks, especially the rural providers, transition to
IP, how do you think this will affect the call completions in
the future?
Mr. Cicconi. Well, notwithstanding Mr. Barton's earlier
service problems, I am not aware that AT&T itself has a rural
call completion problem, but I am very aware that there is a
problem there. The FCC has a proceeding underway right now to
try to deal with it and to deal with it in a way that applies
across all technologies and across all providers, and that is
the way it should be. And I think it is an example of what an
appropriate role of government should be.
Mr. Latta. But do you think as we go forward with the IP,
especially the rural providers, do you think it will help them
to make sure that they don't have the dropped calls in the
future?
Mr. Cicconi. I would be hopeful. But, again, I think that
is one of the reasons you have trials, to test these things,
make sure they work properly, make sure the replacement
technologies are just as reliable as the others.
And just in response to what Mr. Iannuzzi said a minute
ago, too, we can't go out and convert a wire center today from
TDM to IP without permission from the FCC. So while a lot of IP
investment is going on, we can't do the fundamental investment.
There are 20,000 wire centers in the country that have to be
converted to IP and not a single one of them can be converted
without permission from the FCC today.
So that is why we need the trials, to take two of those
wire centers, it is all we have proposed out of 20,000
nationally, conduct the trials and see if we can accomplish
this without the kind of problems that you have experienced in
the rural areas and ensure, frankly, that the replacement
services and technologies are actually better and don't have
those issues.
Mr. Latta. Thank you.
Mr. May, in reviewing your testimony, in your section
number three it says, ``Ultimately, Congress needs to replace
the current Communications Act with a New Digital Age
Communications Act,'' and you state that ``because of the
extent of the dramatic marketplace changes wrought by the IP
transition that has already been described, it seems to me that
Congress ultimately needs to comprehensively overhaul the
Communications Act by adopting a new free market-oriented model
that breaks thoroughly with the past.''
Could you elaborate on that, please?
Mr. May. Yes. Thank you, Congressman Latta.
One of the reasons why ultimately Congress should pass a
new act, it really goes to a lot of the discussion we have had
today back and forth talking about technology, whether policies
are technology neutral or not and how that relates to
competition.
The reality is the current act is not technology neutral
really at its core. We talk so much, those who are in this area
talk about the smokestack or stovepipe regime, because in
essence the act establishes different types of regulation based
on different types of technical or functional constructs, and
that is not the most efficient or most sound way for regulation
to go forward.
So what should happen really in the future is competition
is obviously important, as Mrs. Eshoo has talked about. We all
want competition. But what we want to have really is an
environment, and in fact the digital revolution is enabling
more competition. That is why we have these, that we have cable
and wireless and fiber and all of these things are part of the
digital revolution.
But ultimately in a new act what we would like to have in
my view would be a standard that ties the regulatory activity
of the agency closely to an analysis of the competitive
marketplace, and then only if there is a market failure or
consumer harm, and I recognize if there is consumer harm there
is a place for regulation.
I am not, like Mr. Cicconi, I am not advocating no
regulation. But we need in a new act to tie regulatory activity
much more closely to an analysis of the marketplace. And that
really gets away from all this discussion about this technology
and that technology and that type of thing. But the fact that
technology is changing and it enables competition, that is a
reason for policy changes. It is not a reason to do nothing.
Mr. Latta. Thank you.
Mr. Chairman, my time has expired and I yield back.
Mr. Walden. The gentleman yields back.
We turn now to the gentleman from Pennsylvania, Mr. Doyle,
for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman.
Mr. Chairman, this morning I read in the newspaper that
AT&T recently notified many of its special access customers
that it will eliminate certain long-term discount price plans,
effectively increasing rates by as much as 24 percent.
Competitive carriers argue that they have no alternatives to
gain last mile access to business customers and must simply
accept the higher prices.
Mr. Chairman, I would like to ask unanimous consent to
place a copy of that article that appeared in the Wall Street
Journal this morning and a copy of the ex parte filing that
several companies made to the FCC in regard to those rate
hikes.
Mr. Walden. Without objection.
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Mr. Doyle. Thank you.
Let me ask Mr. Feld and Mr. Iannuzzi, how can AT&T
institute up to 24 percent price increases if these markets are
competitive? And do you find fault in claims by some that
competition today eliminates the need for a regulatory
backstop, particularly in light of AT&T's action to effectively
raise special access prices?
Mr. Iannuzzi. Sure. Only a dominant market player can go
and raise prices ad hoc and to that level of magnitude. It was
quite shocking to see that take place where those network
elements are very vital to run the connectivity within our
network. So if there was true ability to shop and pick, then
they would be foreclosing those sales and those revenue
streams. And AT&T is in the business to make profit, and to
then just raise prices, if the market was working and there is
an equal service, you would go pick the next lowest provider,
provided they had equivalent capabilities.
Mr. Feld. I would add that we often have a confusion
between the underlying infrastructure and the things that ride
on top of the underlying infrastructure. And we look at the
number of wireless carriers, the number of carriers that offer
service through that underlying infrastructure, and looking at
just the surface of that we say, wow, there is a lot of
competition. But when you actually get below the surface to the
infrastructure on which all of that competition rides, you have
still the same kind of network problems, still the same kind of
infrastructure monopolies that you have to worry about.
So I think that what we have seen in special access--and
this is not a new problem, this has been going on for many
years--is that there was a lot of hope and anticipation when we
set up criteria about how we were going to tell whether there
was competition. Some of that did not happen, but also the
criteria were, frankly, too optimistic and did not take into
account the difference between people offering retail service
or people offering different kinds of commercial service and
the critical infrastructure that you have to get to in order to
reach the customers to offer that.
Mr. Doyle. Thank you.
Mr. Cicconi, would you like to respond?
Mr. Cicconi. Yes, sir.
First of all, let's be clear. When we are talking about the
special access facilities mentioned here, we are not talking
about services that are broadband. The FCC has not classed
these services as broadband.
I think one of the reasons, Mr. Doyle, that you read the
Wall Street Journal article that we are not offering service
contracts out 5 and 7 years is because we plan as part of the
IP transition, the reason we are here today, to be replacing
these old facilities with modern broadband fiber-based
facilities, including ethernets. So naturally we don't want to
be offering long-term contracts on a facility if we are going
to be replacing it with an alternative facility.
There is a proceeding underway on special access currently
at the FCC that is designed to gather facts on what alternative
facilities are available for other providers like TelNet to
use. We think that the data the FCC collects from all
providers, including cable, is going to show that there are
ample alternative facilities there.
And one of the alternatives, by the way, is for a CLEC to
build its own facilities. We right now have a project underway,
and hopefully within 2 years we will have run fiber to 1
million businesses in our 22-State footprint. And I think any
other carrier out there is free to do the same thing.
Mr. Doyle. Mr. Cicconi, listen, I understand that you are
transitioning and that it probably makes sense that you are not
going to do 7-year contracts. I think the concern is not so
much that you are discontinuing the long-term contracts, but
that you are raising the rates, you are not passing down the
discounts. And if this were truly a competitive market, I don't
know how you could get away with doing that.
Mr. Cicconi. Mr. Doyle, I have to go back and check on the
rates. But I don't think we have raised prices. I think we have
eliminated some rate plans. But I don't think prices have gone
up.
Mr. Doyle. I would like to see that.
Let me just--well, Mr. Chairman, I see my time has expired.
I will just wait for another time. Thank you.
Mr. Latta [presiding]. The gentleman yields back.
And at this time the chair would recognize the gentlelady
from Tennessee, the vice chair of the full committee, Mrs.
Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman.
And I want to go back to Mr. Waxman's question, talking
about the peering agreements. Mr. May, let me come to you, and
then, Mr. Feld, I am going to want to hear from you. Do you
think the FCC should do a pilot project and test some of the IP
networks to figure out how to make the transition easier for
consumers, for businesses? Where are you on a pilot project?
Mr. May. I am in favor of one, but I have to say I probably
don't need to be as delicate as Mr. Cicconi may need to be. I
think the FCC has been a little slow, I would say, in getting
these trials off the ground, so I would like to see them move
quickly. And I think they would yield useful information. But I
don't want to see them used--over a long time of watching the
FCC, sometimes I know when you start things like this they can
be used in ways that delay ultimately the ultimate decision
making. That shouldn't be allowed to happen with these
projects.
You started out by mentioning the interconnection, I think,
in the IP transition. And I just want to say, and I said this
in my testimony with regard to IP-to-IP interconnection, I
don't think that--and I am just assuming we will have the trial
or not--but ultimately I don't think the FCC should presume
that it is going to regulate these interconnection agreements
in the same way that it did in the TDM world. It is likely that
there won't be many interconnection problems. That hasn't been
the case with pure IP-to-IP connection. Thus far they have been
very rare that there have been disputes. They have ultimately
have been worked out really in a voluntary marketplace way.
So my counsel would be for the FCC to just presume that it
is not going to intervene, that we watch the situation. If it
does turn out that there is a real problem with
interconnection, I said in my testimony that there could be a
regulatory backstop. But it shouldn't look anything like the
current 251/252 process that basically really resembles more of
a public utility style regulatory regime. It should be a
dispute resolution process that ultimately depends on
mediation, and perhaps ultimately baseball-style arbitration or
something like that.
Mrs. Blackburn. OK. Mr. Feld, anything?
Mr. Feld. First, we support having well-constructed trials.
I do think that the FCC has been behaving responsibly, however.
What AT&T has put in so far is much more akin to a phase-in or
a beta test, which you get to at the end, rather than time-
delineated trials with suitable safeguards, which are really
where we are now. We saw what happened when you tried to flip a
wire center on Fire Island this summer, and I am very glad to
hear AT&T say we don't want to do a flash cut like that.
The issue here is, as the FCC properly said in its proper
notice, is that while the trial is voluntary for the carrier,
it is not voluntary for the customers. And the other point I
would make is that in a network if something goes really wrong
and the wire center starts to go down, it can take down other
portions of the network with it.
So we believe in being cautious, but we think that, as with
any other kind of trial, there needs to be appropriate safeties
in place and that those need to be described and settled before
we initiate any trials rather than after we get into it.
Mrs. Blackburn. All right. Thanks.
I am going to yield my time back, Mr. Chairman.
Mr. Latta. The gentlelady yields back. And at this time the
Chair recognizes the chairman emeritus of the full committee,
Mr. Dingell, 5 minutes.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy
and I commend you for this hearing. I also wish to express my
thanks to Mr. Welch for his courtesy to me. Thank you.
I would like to begin by welcoming a fellow citizen of
Michigan, Mr. Mark Iannuzzi, this morning. His company, TelNet
Worldwide, offers valuable services to the businesses of
Michigan.
At issue this morning is the transition to IP-based
communications networks. As some of our witnesses have noticed,
this transition is already underway and has the potential to
confer significant economic and technological benefits on our
people. But we need to learn more about what that transition
means for the future of communications in this industry and
particularly as to how it will affect the consumers.
Incumbent carriers make the very valid point that they are
required to maintain TDM networks at great cost despite the
fact that only 30 percent of all Americans used ILEC switched
networks in 2012. It is my view that the billions spent to
maintain legacy networks can be more efficiently based and
invested in IP-based networks that will be the backbone of the
21st century telecommunications. This part will help advance
the goals of the 2010 National Broadband Plan.
With that said, I understand that AT&T has petitioned the
Federal Communications Commission for forbearance from certain
regulations in order to establish two geographically limited
IP-based test projects. I think there is real value in this
approach. It will provide an invaluable case study to
consumers, businesses, policymakers, and to the government
about what the transition to IP-based networks will entail. I
encourage the Commission to work with AT&T to set these
projects in motion, making certain that there are mechanisms in
place for monitoring and effectively resolving consumer
complaints.
In addition to the lessons that we can learn from AT&T's
potential trial projects, I suggest that policymakers also keep
in mind several fundamental principles when considering the
role of government vis-a-vis IP-based communications. As Public
Knowledge has wisely suggested, our focus should be on ensuring
universal connectivity, interconnection and competition,
consumer protection, network reliability, and public safety.
Those are very important principles to be kept in mind as we go
forward.
I firmly believe that there still exists a need for certain
ex-ante obligations because the Communications Act's purpose is
to make available insofar as possible to all--and I emphasize
all people of the United States--the benefits of our
communications system. That presumption and that comment is as
valid today as it was 79 years ago.
Mr. Chairman, I thank you for your courtesy. I am yielding
back a minute and 24 seconds. And I thank Mr. Welch, and I will
be happy to yield to the gentlelady.
Ms. Eshoo. I appreciate it, Mr. Dingell.
Can I just pursue this issue of the trial? It seems to me
that there is kind of a chicken-and-egg thing going on between
the FCC--maybe it is because we don't have a full Commission
yet--but it seems to me the following. And I could be wrong,
so, Jim, you just jump in and tell me if you think I am wrong.
You will do that anyway.
But anyway, you want the trials, you want the FCC to
approve, give you the green light to go ahead with a trial. It
seems to me that the FCC is saying we will do a trial but we
want the following things in it, and there is not an agreement.
Does that look anything like how you see reality? Because time
is going on.
Mr. Cicconi. Right.
Ms. Eshoo. And I think what Mr. Dingell said is it is just
on the mark. We need to get going.
Mr. Cicconi. I honestly think it may just be a function of
our timing on this, as one chairman is on his way out and
another chairman isn't yet in there. The questions actually
issued were fairly recent, I mean, and they waited until 6
months after we filed the petition to actually ask the
questions. And, frankly, I mean, like a lot of you, I have been
around the town a while and I took the questions as a way of
the FCC saying we are not ready to answer this yet.
But I do take comfort in the fact that we have Democratic
and Republican Commissioners both on the FCC who have said,
yes, we should have trials. Mr. Pai said that, Commissioner
Rosenworcel has said that, categorically go forward. The
principal author of the National Broadband Plan, Blair Levin,
has said, absolutely, he would have said yes to the trials on
day one.
I think the key, Congresswoman, is this isn't about us
exclusively, it is industry-wide and it is nationwide. And I
for one have been reluctant to put in the FCC a, quote/unquote,
AT&T plan for conducting the trials. I think it is really the
job of the FCC to work with all of industry and all
stakeholders and, frankly, State-level government as well to
design those trials, much like was done during the DTV, and I
am pretty confident that once Chairman Wheeler gets there that
that is what will happen.
Ms. Eshoo. Great. Thank you.
Thank you, Mr. Dingell.
Mr. Latta. The gentlelady yields back her time to the
gentleman whose time has expired.
And the Chair now recognizes the gentleman from Illinois,
Mr. Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. Great hearing. I have
learned a lot. And I love trying to stay as long as I can
because you really do hear the point-counterpoint. But you
never miss the opportunity to hear a member bring up a personal
story. So, Mr. Cicconi, I am sure your staff prepared you for
that personal story, and if they didn't then you might need to
look for other staff members.
Mr. Cicconi. I wish, Mr. Shimkus.
Mr. Shimkus. But let me address, and I always get concerned
when I start agreeing with Mr. Waxman every now and then. I
have to check the data file on that. But I do agree we need to
move on a test. We just need to move forward.
And to his comments on Google, they are probably out here
or they are listening, I would encourage them to come in,
because my guess it is 251/252, is why they are not into voice.
That is what my guess is.
Now, if you have talked to them, Mr. Feld, and they have
given you that data. But I think there is interconnection
issues. It is very informative that they are not doing that,
and I think that is a lesson we should learn and find out.
So having said that, just a blanket statement, and I know
the FCC is looking into this, these dropped calls in rural
areas are an issue. And that talks about a backstop. I mean,
that also reinforces an issue of having some type of backstop.
So I want to raise that.
But to Mr. Feld and Mr. Cicconi, public safety is a big
issue for all of us here. Anna and I work very closely on this.
In this move, how do you envision public safety being
positively, or maybe--hopefully not negative--we won't accept a
negative, obviously, response on public safety. So how do we
deal with that? Why don't we start with Mr. Cicconi and then we
will go to Mr. Feld.
Mr. Cicconi. I mean, I hate, Mr. Shimkus, to sound like it
is circular reasoning here, but I think this is one of the
reasons we need to have the trials out there. We are fairly
confident that we can design these systems in a way that takes
account of public safety. Moreover, we fully accept that they
have to work well for public safety. You simply can't have a
new technology deployed where 911 doesn't work or other public
safety features don't work. So I think we all recognize this is
imperative, and I think we need to stress test it to ensure
that it does work and that we can transition it accordingly.
But I think we all accept the obligation has to be there and we
simply can't replace the old technology with new technology
unless 911 works.
Mr. Shimkus. Thank you.
Mr. Feld.
Mr. Feld. Two things. One, planning precedes trials rather
than trials preceding planning. And the thing that has been
troubling to me is I get that we will need to have some
information that we will gather in the trials, that is the
point of doing trials, but before we say let's throw a switch
and see what happens to public safety on this stuff, I want to
know what the recovery mechanisms are, I want them to have
limited tests first before you move on to full tests.
The other important factor is we need to start thinking of
how we make a more robust public safety system in our
competitive and differently enabled technology universe. There
is virtue in redundancy. So maybe we don't have to put
everything on every network the same way if we have ways in
which the networks will work together that are for public
safety.
We have seen some things coming out the Hurricane Sandy
hearings that the FCC has been conducting where we have seen
how different technologies have different strengths and
weaknesses and have responded in a different way. And I think
that one of the exciting advantages of the IP transition is
that it allows us to start thinking about how to take advantage
of the structures of the Internet which rely on redundancy and
flexibility for stability rather than requiring 59 liability
from every single network that is participating.
The last thing I will just mention is we do have to be wary
of new issues that are coming up. I mentioned in my testimony
the problem of swatting, which is caller ID spoofing, which
allows people as a joke to send SWAT teams to other people's
houses. That is not a particularly funny joke. And while
obviously these are challenges that need to be resolved, we
need to be accumulating this checklist of what needs to work as
we move forward.
Mr. Shimkus. Yes, and let me finish on this. I have been
really involved with trying to raise this issue with the FCC
with the convergence of technology and I have given up. I don't
think we will ever change the FCC and the bureaus that it has.
The last thing, the question is, Mr. Iannuzzi, have you
seen in the business sector the cutting of the cord from
landline to cell for the business community as we have seen in
residential services?
Mr. Iannuzzi. Mr. Congressman, an excellent question. In
the business community it is a distinctly landline-oriented
business. While mobile phones are part of the workforce for the
common employee, the way that businesses communicate and
collaborate is inherently a landline type of function. It is
because there is group capabilities going on. You are
continually interacting with a wide variety of locations
perhaps, and so forth, which is not conducive to how cellular
technology has been deployed, which is more about the
individual and how that connects together.
If I may on your very important item here about security
and public safety, the competitive energies already have
migrated for the most part to IP-based 911 service. It is a far
superior solution than currently the legacy TDM one. Why?
Because when we are trying to get our customers' calls to an
emergency authority, the IP network allows us to make sure that
if there is any bottleneck to get to the public safety point,
we have alternate routes to alternate safety points to get to
them or answer it even through our own operators to make sure
that we connect the dots.
Furthermore, we have added in cool technology where if
somebody picks up the phone and they dial 911, we not only send
the call to the public safety organization, but we can then
send it to the building supervisor, the provost of the
university, or if you are a residential user you could go to--
you are out at the show and somebody calls 911 from your home,
we will sent it to your cell phone so that you know that 911
call was made from your home. So we have already made that
move.
And this thing about the IP-to-IP interconnection, yes, do
you have to do things in a measured fashion? Certainly. But
when it comes to network center connecting and peering at the
IP basis, that is different than how you are talking to the end
user, and that IP-to-IP interconnection goes on right now.
Mr. Latta. Thank you very much. The gentleman's time has
expired.
And the chair now recognizes the gentleman from Vermont,
Mr. Welch, for 5 minutes.
Mr. Welch. Thank you very much, Mr. Chairman.
Mr. Burke, thank you for being here. Your testimony
mentions a few carriers in Vermont are investing in fiber, and
my question is what policy decisions would change carrier
incentives to invest in rural areas and are there regulations
that are imposing unnecessary costs that are hindering any of
that investment?
Mr. Burke. Thank you for the question, Congressman. I think
that it is a very tricky question when you get to how do we
move out into a better business plan in more rural areas. I
mean, dollars are dollars. And I guess to call on a predecessor
of my own, I will go back to my grandfather. He was a dairy
farmer, and I can remember when I was little he said, you know
why this stool has three legs, Johnny? And I said, no, sir, I
don't. He said, because if it had two it would just fall over.
And I think that is actually what we may be dealing with
here. I think we actually have a potential as we move forward
into an IP world, and we are moving there, to be able to do it
in a better and more focused way if in fact we use a stool with
three legs; the Federal leg that obviously is your
responsibility and the FCC's; industry's leg and how we get out
there to make ubiquity part of the process here, because if it
is not ubiquitous it doesn't really work the way we want it to
work; and last but not least is the States' responsibility and
the States' ability, be it with their own USF funds to help
manage to get this stuff out there, or be it their policies to
help make the move-out for industry itself more seamless,
easier, and more attractive to their business plan. The States
are a vital part of this. And without three legs to that stool,
I am not so sure that it has got any chance of succeeding.
Mr. Welch. Thank you.
For Mr. Cicconi and Mr. Iannuzzi, just quickly, what
actions are required by the FCC in order to ensure that
competition will continue and actually thrive in an all-IP
world? I would appreciate it if it was quick and ABC, because I
don't have that much time. I will start with you, Mr. Cicconi.
Mr. Cicconi. Well, I think you have competition today, Mr.
Welch, and I think as the FCC moves forward with the IP
transition it certainly ought to take a look at what
regulations are needed going forward to help preserve the
competition that is there today. I would certainly grant that.
But I would also suggest that on a going-forward basis that it
would be a mistake to assume that the problems of the present
and the future are necessarily the same as they were in 1996 or
1934.
So I think the notion of taking legacy rules and applying
them to new technology is something the National Broadband Plan
actually spoke to, and it talked about how applying legacy
rules could actually retard the investments that were necessary
and could have unintended consequences of siphoning investments
away from the new technologies that were needed. So I think
that would be our main concern, is that we not overcorrect here
and assume there are problems until we actually know what those
problems are.
Mr. Welch. Thank you.
Mr. Iannuzzi?
Mr. Iannuzzi. It is very simple. In terms of the FCC, we
just need the clarity that removes, that if there is any
technological implication in the way the act works, it is
technically neutral. Communication systems are by their design
technical, so if there is not technical advancements, then what
were we trying to do in terms of trying to get where we are at,
if we weren't trying to make things better, faster, cheaper,
smarter.
So my point here is that the key thing to ensure
competition is to eviscerate. Take out the eraser on the spot
that we have the technology underpinning to the act, because it
was about creating competition. It was a framework to correct a
market-based structure so that we could compete.
Mr. Welch. Thank you very much.
Back to Mr. Burke, we have got a real epidemic of rural
call completion, and as far as my constituents and the people
you serve as well, our concern, fixing that problem, can't come
fast enough. How can IP transition help to address the issue of
incomplete calls, particularly in rural areas?
Mr. Burke. Well, I think that obviously you have to take a
look as you move forward here with where the problems lie. And
if you take a look at what we will see I think in call
completion, the order comes out next Monday, I believe, is the
date that the FCC is actually going to issue it. The fact of
the matter is that call completion is probably a methodology
that grew from terminating access charges, and as least-cost
routers sensed heavy terminating access charges, they decided
that they would not complete the call. Least-cost routers are
innovation, too, and we can't get carried away with innovation.
Certainly it has given us a lot of good things, but I suspect
the idle innovator like the idle hands can be the devil's work
thing, too, when it wants to be, and in fact that may have been
the case here.
How we go forward is to try to make sure that there is a
regulatory touch as well that keeps an eye on moving forward in
this transition. Mr. Cicconi hasn't said that that isn't the
right idea. I would point out, too, that with call completion,
that began, and the answer to that began through the States.
When the problems occurred, I know that you got them,
Congressman. You said that you did, and I believe that you did.
But the fact of the matter is most of the time your public
service commission or your AG's office probably got them first
as people became unhappy with what they were getting and what
they weren't getting in rural America. And hopefully keeping
those regulations in place will allow for consumers to get the
kind of protection that they have learned to expect in their
old network as we move through to a new one.
Mr. Welch. My time has expired. I yield back. Thank you.
Mr. Latta. Thank you very much. The gentleman yields back.
And the chair now recognizes the gentleman from Louisiana,
Mr. Scalise, for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate your
having this hearing.
And I want to thank all of the witnesses for coming and
testifying and giving your perspective on the changes in
technology. I am excited by it, when you see the things that
people are able to do now as we have this transition to
Internet protocol. You also have coupled with that the upgrades
that are being made from copper to fiber optics. And, of
course, that brings billions of dollars of investment. It gives
consumers a lot more options to do things with voice and video
and sending larger packets of data.
Of course, the investments that go with it, I know, Mr.
Cicconi, your company and other incumbents are investing
billions of dollars to help build out these new networks, to
use this new technology in better ways even with the current
regulatory environment. I want to ask your take, because some
would say that the fact you are investing these billions of
dollars proves that there is no need to change the regulatory
structure. How would you answer that?
Mr. Cicconi. Well, I think that the first thing I would do
is kind of refer back to the chart, Congressman, that opened
the hearing here that talks about the way the market is set up
today, where by the end of this year we will have three-
quarters of Americans using either wireless only or VoIP
providers as opposed to the circuit-switched provider. As I
said earlier, we have fewer than 14 million circuit-switched
telephone customers at AT&T at the present time, which is a
small fraction of the numbers that any other provider has out
there in these competitive markets. So I think that would be
the first point that I would make.
The second point is that the investment that has occurred
over the last few years in wireless and IP technologies is, of
course, I think it is related to the fact that these are the
least regulated areas of technology. It is not accurate that
the 1996 act is technology neutral. In fact, it penalizes
wireline technologies uniquely by imposing a lot of extra
requirements on them. And I think that is one of the reasons
that Google has decided not to offer VoIP service in a city
like Kansas City.
Mr. Scalise. And that is a good point. I want to ask you
about that, because the 1996 Telecommunications Act does impose
some ILEC-specific rules. How does that actually affect your
investment decisions?
Mr. Cicconi. Well, I think on a going-forward basis with
IP, I think we hear what Google hears, which is some companies
advocating that we simply take the common carriage model in
Title 2 and apply it as if nothing has changed to modern
competitive IP services. And I certainly think that is not what
the act envisioned. I also think it would be a big mistake. But
it creates regulatory overhang for a company like Google or a
company like AT&T in deciding to make a wireline investment
decision.
Now, to the final point, we have gone ahead anyway here
recently and decided to invest in this area. And, quite
honestly, it was a difficult decision for us, running fiber to
these buildings and expanding our user services to millions
more Americans, including in a lot of rural areas. But I think
it is a leap of faith on AT&T's part in terms of the regulatory
environment. We have read the National Broadband Plan. We take
comfort in the fact that it speaks to these issues, it has been
endorsed by the President, it has been endorsed by the Congress
on a bipartisan basis, and I think it gives us confidence going
forward that these regulatory issues and uncertainties will get
settled in the proper manner. And, of course, I think one the
reasons we filed for the trials is to kind of spur that along.
Mr. Scalise. I appreciate that.
I want to ask Mr. May, because I am running out of time,
you have been advocating for an updated Telecommunications Act
to reflect the digital age. If you can share with me some of
the principles that you would envision. And I left my brick
telephone at home because I didn't want to get into that here,
but since I have got you here, you might even want to mention
something about the 1992 Cable Act, which is probably also very
outdated and needs to be updated.
Mr. May. Thank you, Congressman. That is outdated, for
sure, the 1992 act. And, frankly, the 1996 act is as well,
although at the time it was adopted it, you know, was a
transitional piece of legislation that was good.
You know, here are the basic fundamental principles going
forward. And you have to think about it really in the larger
sense, because, obviously, I have talked about some regulatory
backstops and safeguarding universal service and so forth. But
in a large sense a new act should get rid of the silos that are
in the present act, the stovepipes. And they are not technology
neutral, they are based on technology constructs, the different
titles. And it should replace the public interest standard that
now is in the act in 110 different places, delegates authority
to the FCC just to act in the public interest, that
indeterminate standard, with a competition-based standard that
is antitrust-like. I am not suggesting that you are going to
import all of antitrust jurisprudence. But it is going to focus
on the competitive marketplace and regulation; therefore,
shouldn't be adopted unless there is a market failure or proof
of consumer harm.
Then, finally, what a new act should do is circumscribe
somewhat the FCC's general rulemaking authority, which now, as
you know, operates in what we would call an ex-ante,
anticipatory fashion. When you engage in that process what you
do by definition is conjecture harms that may occur in the
future because you are trying to conceive of all potential
harms.
What happens is generally those types of rulemakings are
overly broad, broader than they need to be. So you want to get
the FCC to act more in a post hoc capacity, acting on
individual complaints that say there is a specific problem. You
know, Mr. Iannuzzi says with this carrier in this place there
is a market failure for some reason, I have got an
interconnection problem. You take it into an adjudicatory
context and you try and address that specific problem rather
than proscribing a lot of conduct that otherwise might be
beneficial to the country otherwise.
Mr. Scalise. I appreciate the answers. And I yield back.
Mr. Latta. Thank you very much. The gentleman's time has
expired.
And the chair now recognizes the gentleman from New Jersey,
Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
I think we can all agree that the IP transition already
underway is good for American consumers, the economy, and the
country as a whole. So I welcome this conversation.
However, we must work with industry, public interest
groups, and consumers to ensure that as it progresses these
technological advances do not come at the expense of consumer
choice and access, public safety, or competition.
I think some of you know that nearly a year ago, October
29th is next week, my district and the State of New Jersey were
hit hard by Hurricane Sandy, and one of the many impacts of
that devastation was the loss of communication services. Power
outages and floods disrupted many types of communications,
including wireless, television, telephone, and Internet
services. In fact, yesterday, I was with Congressman Leonard
Lance and Yvette Clarke and Congressman Holt and Congressman
Payne in Newark, and we were talking about this, you know, on a
bipartisan, regional basis.
So I wanted to ask, I know some of this has been touched
upon. I am going to try not to be repetitive. But I understand
that traditional copper networks operate even when power lines
go down. So my question of Mr. Cicconi is, because AT&T has a
large legacy copper communications network and significant
plans to deploy new fiber infrastructure, how will the new
fiber networks handle natural disasters like hurricanes? We
know that the copper continued to operate. But what happens now
with the new fiber networks and, you know, dealing with that
issue? How you going to deal with it?
Mr. Cicconi. There is, unfortunately, no IP technology,
Congressman, that allows you to power the line. You know, you
cannot put power over a fiber connection. Fiber has many other
advantages in addition, though, to its Internet capacity and
one of them that I think is relevant in a hurricane or a
flooding zone or in a Sandy-type situation is that seawater
will destroy copper and make it unrepairable. Fiber is very
resilient in that type of situation, and, frankly, so are our
wireless networks. They are very resilient. We get them back up
and running very quickly after these storms. And I say that,
knock on wood, because we are still in hurricane season.
Mr. Pallone. Now, again, I think that we all agree that
these communities should not lose services they rely on simply
because they are unlucky enough to be in the path of a storm.
So if there are, you know, different consequences from these
replacement services with fiber, you know, why--again, I guess
this goes back to the trial, but what else can we do? Is there
anything else we can do? And what are you going to do with
these real world trials so we can--how do they relate to the
problem that I just discussed?
Mr. Cicconi. Well, sir, I mean, I don't want to second-
guess, you know, a decision made by other carriers, but I think
that what trials and proper planning for the IP transition
would allow is for us to test the capabilities of these
services, not have people surprised if you deploy a service and
a fax machine doesn't work the same way, things of that nature.
I do think it is iterative, though. I think the technology
will evolve. And, frankly, we can help it evolve if we know
what we are trying to do. For example, in our wireless home
phone service, we have actually asked the manufacturers to add
a data capability. That came online this summer. So we actually
have that in our wireless home phone product.
But I think as we go forward over the years I would expect
that the wireless capabilities will evolve and change to meet
those needs so that, frankly, it could be more robust and more
reliable and provide all of the same services and more that our
copper line facilities do.
Mr. Pallone. Do you have your hand up? Go ahead.
Mr. Feld. Yes, thank you. One of the things that we have
asked the FCC to do, and to put priority on this, is to
initiate a separate proceeding for disaster guidance. We have,
as you know, a situation in Mantoloking, New Jersey, also Fire
Island, where Verizon did not know what they were supposed to
do. They didn't want to rebuild their copper network, but they
also needed, had no guidance for what they should be doing
instead.
We think that the FCC, in order to address this problem of
public safety, needs to get out there and start a proceeding
right now, first thing, as we are doing this transition. And we
know that carriers are going to want to put in new
infrastructure as they rebuild after storms like Sandy. What
are their responsibilities? What are they supposed to do and
what can the people in those communities rely on in order to be
able to rebuild their lives?
We have asked that. We have had 17 other public interest
organizations join us in asking the FCC to begin a proceeding
on this, and hopefully we will see action on that as soon as
Chairman Wheeler is confirmed.
Mr. Pallone. Go ahead. With the chairman's approval, go
ahead.
Mr. Iannuzzi. May I comment?
Mr. Latta. Just briefly.
Mr. Iannuzzi. I would like to point out one key thing here,
is that make sure we embrace the small, middle-size business
market. A lot of conversation here focuses on residential, and
it is certainly important. The charts that I see on the side
here talk about a degradation in copper-based usage at the
residential level. That is not the case at the business level.
That is typically the only connection into there, is copper
facility. That copper facility can handle the power line backup
requirement you need. So we often deploy where they are working
in parallel; we have the next-generation IP technology taking
care of all those ones and then we have the copper-based lit
services, which are taking care of all those other critical
functions and allowing that to work its place out as time goes
on.
Mr. Latta. Thank you.
Mr. Pallone. Thank you, Mr. Chairman.
Mr. Latta. The gentleman's time has expired.
And the chair now recognizes the gentleman from Missouri,
Mr. Long, for 5 minutes.
Mr. Long. Thank you, Mr. Chairman.
And thank you all for being here today. And given your
testimony, I am kind of the cleanup hitter here. Well, they
should have started with me. We would have been done a long
time ago.
But, Mr. Cicconi, you made mention earlier in the
questioning portion of this hearing that you have read the
FCC's National Broadband Plan. And being that you have read
that, I will remind you that they came to a conclusion, the
FCC's National Broadband Plan, to, quote, ``Regulations require
certain carriers to maintain plain old telephone service.'' And
they highlight a requirement that is not sustainable and lead
to investments in assets that could be stranded.
So if FCC believes that maintaining legacy telephone
service is not sustainable, and that investments are at risk of
being stranded, shouldn't the FCC change its policies that have
caused this problem?
Mr. Cicconi. Well, Mr. Long, I do think it is appropriate
for the FCC to move forward. It put together an excellent plan
at your direction, at the Congress' direction. It has been
widely endorsed. It anticipated this very issue, the words you
quoted. And, you know, and unfortunately, we are 4 years along
here, and I don't think we have seen the implementation of some
of the things that they recommended. But I remain very hopeful
that once the Commission is back up to full strength that they
will do so. And, again, our petition last year for the IP
trials was designed in part to spur along the very process you
just highlighted, sir.
Mr. Long. OK. Again, when you are the last guy at bat, some
of this you have touched on before. But let me ask you to
elaborate, if you will, on the types of services that would be
available through these Internet protocols that are unavailable
on the copper networks.
Mr. Cicconi. Well, I think the IP transition--and I am at
risk of oversimplifying, I am a liberal arts major, not an
engineer--but it by and large is about voice becoming simply
another application riding on an Internet pipeline. OK? So as
we build out fiber, we are building out Internet capability and
voice then becomes just another application.
And so I think what that provides, obviously, is
competitive opportunities for a lot of people. But it also
provides much more accessibility. It allows people to design
and innovate based on IP. And so you may bring to voice
services through this IP transition some of the same
innovations you are seeing, you know, in every other form of
Internet service. And, you know, if you pull out an iPhone and
you go through the app store, I think you can get a sense of
the innovation that is available. And I think as we transition
these networks toward IP, I think we will see the same types of
innovation there. And I think it is obviously important for the
country from every standpoint of economic activity, but also I
think from a consumer standpoint too.
Mr. Long. OK. I represent Missouri 7, which is Springfield,
Joplin, Branson area, down southwest corner of the State. And I
think that we can all agree, out of the 435 Congressional
districts, that I have the best one in the United States. And
in that area, there are 11 counties, part of 11 counties, 10
full counties, part of an 11th county. So I have a lot of rural
areas along with Springfield, Joplin, Branson. And a lot of my
constituents don't have ready access to the latest medical
technology, and even the number of doctors that you would find
in urban areas. And that is another topic. But can you
elaborate on the types of telemedicine and mobile health
applications that would be available to my constituents in the
best congressional district in the United States if they did
have the IP services?
Mr. Cicconi. Well, sir, I think, again, I think if we are
able to get the broadband connections into those areas, and
they are fulsome and they are both wired and wireless, I think
you have an infinite variety of services that are available
that are being actually put together by innovators today. I
think our entire healthcare system, notwithstanding the current
difficulties, is actually innovating quite well in terms of
making records available and things of this nature.
Mr. Long. Can you give me any more specifics or anything on
telemedicine?
Mr. Cicconi. We can certainly pull together something for
you, Mr. Long, and get it to you. I don't have anything
specific I could lay out in the hearing here today, though.
Mr. Long. OK. I have zero seconds. So with that, if I had
any time I would yield it back.
Mr. Latta. The gentleman yields back, and his time has
expired.
Seeing no other members wishing to ask questions this
afternoon, I want to thank you for this excellent panel. And I
am sure that the chairman would also want me to extend his
heartfelt thanks for you all being here today.
And without anything else coming before the committee
today, we will stand adjourned.
[Whereupon, at 12:43 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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