On Jan. 30, 2014, the Federal Communications Commission (FCC) voted to approve a Petition AT&T had filed in November 2012, seeking to conduct trials of the transition from TDM technology to all-Internet Protocol (IP) networks. The FCC’s ruling, which has not yet been released, invites service providers to submit proposals for the conduct of these transition trials.

Background
In the year 2000, there were more than 200 million TDM-based landline telephone access lines in the United States. By December 2013 that figure had declined to only 96 million such lines. While part of the decline has been made up by interconnected VoIP (50 million “lines”), the FCC estimates that 40 percent of all households in the country have “cut the cord” and receive wireless voice services only.

Against this backdrop, AT&T and other large ILECs have sought authority to decommission their TDM wireline voice networks and transition to VoIP services provided over multi-purpose IP-based broadband networks. There is widespread recognition that the transition to IP-based networks is taking place, and widespread agreement that the FCC should be involved in the process. The question is how the transition should occur, what role the FCC should play, and what legacy obligations from the traditional public switched telephone network (PSTN) should be maintained in an all-IP environment. AT&T has asked for authority to conduct a trial that evaluates the policy and service implications of migrating customers to IP-based services. The idea, AT&T says, “is to replicate, on a small scale, the broader TDM sunset and migration to IP networks and services before we try to implement the conversion to all-IP across the country.”

The Order
On Jan. 30, 2014, the FCC Commissioners voted unanimously to adopt an Order, Notice of Proposed Rulemaking, and Request for Further Comment that in many important respects approves AT&T’s request. Described as a “set of voluntary experiments,” the FCC has asked service providers to submit proposals for transition trials. Proposals are due by Feb. 20, 2014, followed by a public comment and reply period ending on March 31, 2014, with a final decision on the proposals to be made at the FCC’s May meeting.

The FCC’s evaluation of the trial proposals will be based on what it calls the “enduring values” underlying its stewardship of the nation’s communications networks: 

• Public Safety – Public safety communications must be available no matter what underlying network technology providers may use;
• Universal access – All Americans must have access to affordable communications services;
• Competition – The public is served by competition that provides choices for consumers and businesses; and
• Consumer protection – Service providers must accurately describe the terms on which they offer service and must treat consumers fairly.

The FCC hopes the trials will enable it to gather information in the following areas:

• Service-based experiments: Providers are invited to submit proposals to initiate tests of IP-based alternatives to existing services in discrete geographic areas or situations; 
• Rural America: Experiments will focus on ways to deliver robust broadband service to rural areas. While most of the trial is focused on ILEC services, based on the news release and statements at the meeting, this component may permit competitive providers to obtain universal service funding to build broadband networks, separate from the “Connect America Fund” process under Section 254’s “Universal Service” mandate. The details of this aspect of the trial will be important, and will not be available until the formal order is released;
• Disability access: Experiments will explore how to ensure that speech- and hearing-impaired Americans, and those with other disabilities, will continue to have access to quality communications services in an all-IP environment; and
• Telephone numbering in all-IP world: a numbering testbed will address concerns raised about how to handle number assignment and the operation and maintenance of numbering databases (such as the local number portability database) in an all-IP world, without disrupting current systems.

AT&T’s Jan. 21, 2014 Ex Parte Submission
While service providers will be free to submit trial proposals as they see fit, we expect that AT&T’s Jan. 21, 2014 ex parte submission to the FCC provides a roadmap for what the Commission will be looking for in trial proposals.

In that pleading, AT&T proposes a two-stage process. In the first stage, participating carriers would file detailed plans that identify their existing TDM services; the IP-based replacements for those services; and when the IP versions would be available. As part of the first phase, the carrier would file petitions under Section 214 of the Act for authority to discontinue the affected interstate TDM based-services. After approval by the Commission, the carrier would be permitted in the first phase of the trial to “grandfather” existing TDM services and allow existing customers to continue receiving those services, while permitting the carrier to fulfill all new orders for service in the relevant wire center using IP-based and wireless alternatives.

During Phase 2, the carrier could file a second Section 214 application to withdraw the grandfathered interstate TDM services for existing customers. That application would identify how many customers remain for each TDM service to be discontinued and would provide a retirement plan, including the notice(s) to be provided to customers, the available wireline and wireless IP replacement services, and the timeframe for when the conversion of the wire center to all-IP services would be complete. Under this proposal, the FCC would have the opportunity to evaluate the results of the first phase of the trial before granting participating carriers approval to proceed with the withdrawal of TDM services for existing customers.

The FCC’s Actual Order Will Provide More Details
The discussion above is based on comments made at the FCC’s public meeting on Jan. 30, 2014, on the news release issued following that meeting, and on the AT&T ex parte filing just discussed. While we believe our discussion above is accurate based on those materials, the FCC’s actual, formal order in this matter, which has not yet been issued, will provide important details and clarification in a number of areas. We will provide a further update regarding this matter when the FCC’s order is released.