FCC's IP Decision Might be Good for Providers and Bad for Business

By Russell Frisby

On August 6, 2015, in a series of rulings and tentative decisions that will afford telecommunications providers more flexibility in transitioning to IP networks while at the same time may serve to impose unanticipated costs on business customers, the Federal Communications Commission (FCC) adopted two Orders and a Further Notice of Proposed Rulemaking (FNPRM) in its IP Technology Transitions proceeding. The orders dictate the rules that telecommunications providers must follow before they will be allowed to retire their copper telephone lines.

In the FNPRM, the FCC is seeking comment on the standards and procedures which should be followed when providers seek to discontinue, reduce or impair service. Since the rulings were approved subject to "editorial privileges" it is unclear when they will be released and whether the FCC will make further changes.

Copper Retirements
The FCC, in a 3-to-2 vote and with strong dissents, is requiring that business customers receive three months' advance notice of plans to retire copper lines. Providers would retain flexibility to retire copper networks in favor of newer facilities without prior FCC approval so long as no service is discontinued, reduced or impaired in advance. It is unclear whether the FCC will let providers continue to engage in the practice of de facto copper retirement by ceasing to maintain copper lines. While the FCC's decision is positive for providers, there appears to be no recognition of the unanticipated costs which might be imposed upon business customers in terms of higher rates, and the possible need to make software and equipment upgrades and changes.

Service Discontinuances
Although Section 214 of the Communications Act requires providers to receive FCC approval before discontinuing, reducing or impairing service, the agency has never codified the criteria used to evaluate and compare replacement and legacy services. In the FNPRM, the commission tentatively concludes that both consumers and industry would be served by clarifying these standards, and seeks comment on criteria, which include:

  • Support for 911 services and call centers
  • Network capacity and reliability
  • Quality of both voice service and Internet access
  • Interoperability with devices and services, such as alarm services and medical monitoring
  • Access for people with disabilities, including compatibility with assistive technologies
  • Network security in any IP-supported network that is comparable to the legacy network
  • Coverage throughout the service area, either by the substitute network or via service from other provider
  • Plan for outreach to affected consumers

What Does This Mean For You?
The FCC's actions are positive for telecommunications providers because they now have great flexibility as they transition from analog to IP networks. However, the FCC could still seriously constrain provider options by imposing onerous conditions on providers as a condition of receiving Section 214 approvals.
Many businesses may be in for a big surprise given that large customers are already complaining about the significant and unexpected costs which have been imposed upon them as a result of copper retirements and service discontinuances. Under these circumstances, it will be important for all those affected to understand the complexities of the FCC's decisions and to follow the ongoing federal proceeding. Consequently, to the extent that they have not already done so, both providers and business customers must begin to plan for this new future from both an operational and legal perspective.

For more information on the FCC’s IP decision or to discuss how this will affect your company's business, please contact Russell Frisby, William Gotlieb, William Syverson or your usual Stinson Leonard Street LLP attorney.

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