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Regulation - What is it Good For? Technology

Robocalls and Small Carriers

In July, NTCA filed comments in the FCC docket that is looking at an industry-wide solution to fight against robocalls. The comments outline some major concerns about the ability of small carriers to participate in the process.

The industry solution to stop robocalls, which I have blogged about before, is being referred to as SHAKEN/STIR. This new technology will create an encrypted token that verifies that a given call really originated with the phone number listed in the caller ID. Robocalls can’t get this verification token. Today, robocallers spoof telephone numbers, meaning that they insert a calling number into the caller ID that is not real. These bad actors can make a call look like it’s coming from any number – even your own!

On phones with visual caller ID, like cellphones, a small token will appear to verify that the calling party is really from the number shown. Once the technology has been in place for a while, people will learn to ignore calls that don’t come with the token. If the industry does this right, it will become easier to spot robocalls, and I imagine a lot of people will use apps that will automaticlly block calls without a token.

NTCA is concerned that small carriers will be shut out of this system, causing huge harm to them and their customers. Several network prerequisites must be in place to handle the SHAKEN/STIR token process. First, the originating telephone switch must be digital. Most, but not all small carriers now use digital switches. Any telco or CLEC using any older non-digital switch will be shut out of the process, and to participate they’d have to buy a new digital switch. After the many-year decline in telephone customers, such a purchase might be hard to cost-justify. I’m picturing that this might also be a problem for older PBXs – the switches operated by private businesses. The world is full of large legacy PBXs operated by universities, cities, hospitals and large businesses.

Second, the SHAKEN/STIR solution is likely to require an expensive software upgrade for the carriers using digital switches. Again, due to the shrinking demand for selling voice, many small carriers are going to have a hard time justifying the cost of a software upgrade. Anybody using an off-brand digital switch (several switch vendors folded over the last decade) might not have a workable software solution.

The third requirement to participate in SHAKEN/STIR is that the entire path connecting a switch to the public switched telephone network (PSTN) must be end-to-end digital. This is a huge problem and most small telcos, CLECs, cable companies, and other carriers connect to the PSTN using the older TDM technology (based upon multiples of T1s).

You might recall a decade ago there was a big stir about what the FCC termed a ‘digital transition’. The FCC at the time wanted to migrate the whole PSTN to a digital platform largely based upon SIP trunking. While there was a huge industry effort at the time to figure out how to implement the transition, the effort quietly died and the PSTN is still largely based on TDM technology.

I have clients who have asked for digital trunking (the connection between networks) for years, but almost none of them have succeeded. The large telcos like AT&T, Verizon, and CenturyLink don’t want to spend the money at their end to put in new technology for this purpose. A request to go all-digital is either a flatly refused, or else a small carrier is told that they must pay to transport their network traffic to some distance major switching point in places like Chicago or Denver – an expensive proposition.

What happens to a company that doesn’t participate in SHAKEN/STIR? It won’t be pretty because all of the calls originating from such a carrier won’t get a token verifying that the calls are legitimate. This could be devastating to rural America. Once SHAKEN/STIR is in place for a while a lot of people will refuse to accept unverified calls – and that means calls coming from small carriers won’t be answered. This will also affect a lot of cellular calls because in rural America those calls often originate behind TDM trunking.

We already have a problem with rural call completion, meaning that there are often problems trying to place calls to rural places. If small carriers can’t participate in SHAKEN/STIR, after a time their callers will have real problems placing calls because a lot of the world won’t accept calls that are not verified with a token.

The big telcos have assured the FCC that this can be made to work. It’s my understanding that the big telcos have mistakenly told the FCC that the PSTN in the country is mostly all-digital. I can understand why the big telcos might do this because they are under tremendous pressure from the FCC and Congress to tackle the robocall issue. These big companies are only looking out for themselves and not the rest of the industry.

I already had my doubts about the SHAKEN/STIR solution because my guess is that bad actors will find a way to fake the tokens. One has to only look back at the decades-old battles against spam email and against hackers to understand that it’s going to require a back-and-forth battle for a long time to solve robocalling – the first stab of SHAKEN/STIR is not going to fix the problem. The process is even more unlikely to work if it doesn’t function for large parts of the country and for whole rural communities. The FCC needs to listen to NTCA and other rural voices and not create another disaster for rural America.

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Regulation - What is it Good For?

FCC Looks to Kill Copper Unbundling

FCC Chairman Ajit Pai circulated a draft order that would start the process of killing the unbundling of copper facilities. This unbundling was originally ordered with the Telecommunications Act of 1996, and unleashed telephone and broadband competition in the US. This new law was implemented before the introduction of DSL and newly formed competitors (CLECs) were able to use telco copper to compete for voice and data service using T1s. The 1996 Act also required that the big telcos offer their most basic products for resale.

The FCC noted that their proposed order will “not grant forbearance from regulatory obligations governing broadband networks”, meaning they are not going to fully eliminate the requirement for copper unbundling. This is because the FCC doesn’t have the authority to fully eliminate unbundling since the obligation was required by Congress –  the FCC is mandated to obey that law until it’s either changed by Congress or until there is no more copper left to unbundle. Much of the industry has been calling for an updated telecommunications act for years, but in the current dysfunction politics of Washington DC that doesn’t look likely.

The big telcos have hated the unbundling requirement since the day it was passed. Eliminating this requirement has been near the top of their regulatory wish list since 1996. The big telcos hate of unbundling is somewhat irrational since in today’s environment unbundling likely makes them money. There are still CLECs selling DSL from unbundled copper and generating monies for the telcos that they’d likely not have otherwise. But the hatred for the original ruling has become ingrained in the big telco culture.

The FCC’s proposal is to have a three year transition from the currently mandated rates that are set at incremental costs to some market-based leased rate. I guess we’ll have to see during that transition if the telcos plan to price CLECs out of the market or if they will offer reasonable lease rates that will continue to offer connections.

This change has the possibility of causing harm to CLECs and consumers. There are still a number of CLECs selling DSL over unbundled copper elements. In many cases these CLECs operate the newest DSL electronics and can offer faster data speeds than the telco DSL. It’s not unusual for CLECs to have 50 Mbps residential DSL. For businesses they can now combine multiple pairs of copper and I’ve seen unbundled DSL products for businesses as fast as 500 Mbps.

There are still a lot of customer that are choosing to stay with DSL. Some of these customers don’t feel the need for faster data speeds. In other cases it’s due to the fact that DSL is generally priced to be cheaper than cable modem products. At CCG we do surveys and it’s not unusual to find anywhere from 25% to 45% of the customers still buying DSL in a market that has a cable competitor. While there are millions of customers annually making the transition to cable modem service, there are still big numbers of households still using DSL – it’s many years away from dying.

There is another quieter use of unbundled copper that still has competitors worried. Any competitor that offers voice service using their own switch is still required by law to interconnect to the local incumbent telcos. Most of that interconnection is done today using fiber transport, but there still is a significant impact from unbundled elements.

Surprisingly, the vast majority of the public switched telecommunications network (PSTN) still uses technology based upon T1s. There was a huge noise made 5 – 10 years ago about having a ‘digital transition’ where the interconnection network was going to migrate to 100% IP. But for the most part this transition never occurred. Competitors can still bring fiber to meet an incumbent telco network, but that fiber signal must still be muxed down to T1 channels using T1s and DS3. The pricing for those interconnections are part of the same rules the FCC wants to kill. CLECs everywhere are going to be worried about seeing huge price increases for the interconnection process.

The big telcos have always wanted interconnection to be done at tariffed special access rates. These are the rates that often had a T1 (1.5 Mbps connection) priced at $700 per month. The unbundled cost for an interconnection T1 is $100 or less in most places and competitors are going to worry about seeing a big price increase to tie their network to telco tandems.

It’s not surprising to see this FCC doing this. They have been checking off the regulatory wish list of the telcos and the cable companies since Chairman Pai took over leadership. This is one of those regulatory issues that the big telcos hate as a policy issue, but which has quietly been operationally working well now for decades. There’s no pressing reason for the FCC to make this change. Copper is naturally dying over time and the issue eventually dies with the copper. There are direct measurable benefits to consumers from unbundling, so the real losers are going to be customers who lose DSL connections they are happy with.

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