The Transition to IP Telephony

ATTAT&T reported to the FCC about the progress of its transition of customers from a traditional TDM network to an all-IP network. AT&T had undertaken two trials of such a conversion in Carbon Hill, AL and Delray Beach, FL.

These were voluntary trials. AT&T had advertised widely and asked customers to move to the new IP-based services. In Carbon Hill 36% of residents and 28% of businesses voluntarily moved to the new service. In Delray Beach the numbers were similar with 38% and 25% converting. AT&T reported there were no reports of degraded service, including the transition of business customers to IP-based Centrex and similar services.

Since the trials were announced AT&T has also grandfathered Centrex and TV1-Analog Video service, meaning they will take no new orders for the services. The company also asked the FCC’s permission to discontinue 13 legacy services that are obsolete. This includes products that most people never heard of like 4-wire and voice-grade telemetry and various alarm bridging services. The company also has asked permission to discontinue six operator services including collect calling, person-to-person calling, billed to third party, busy line verification, busy line interrupt and international directory assistance.

These trials need to be put into perspective. From a technical perspective there is no reason to think that transitioning these service from TDM to IP-based technology wouldn’t work because a lot of the rest of the telephony world made that transition years ago. Cable companies like Comcast and anybody operating on an all-fiber network has been offering IP-based telephone products for many years. AT&T’s offerings include many products that are strictly copper-based, such as the legacy products they want to discontinue.

And that leads to the whole purpose behind these trials. AT&T wants to move customers off old copper networks to either a landline or wireless IP-based solution. Since the company’s goal is to tear down copper, the vast majority of such transitions will be to the company’s cellular network. A miniscule percentage of AT&T’s customers are on fiber – particularly residential customers since the company has launched very little FTTP in that market.

The trials are largely the result of what happened to Verizon on Fire Island a few years ago after Hurricane Sandy. There Verizon didn’t replace destroyed copper but moved people to a cellular-based service. But unlike these trials, which were meticulously slow and careful, it seems that in many of the Fire Island cases Verizon did not offer equivalent services to what they had offered before the hurricane. Apparently things like burglar alarms, medical monitoring devices, and other services didn’t work on the new wireless connections.

The FCC has already granted these big telcos the ability to tear down copper as long as they follow customer notification processes. My guess is that after these trials are blessed by the FCC that the companies will begin ripping down rural copper all over the country.

I expect that many customers are going to be unhappy when they lose their copper. Anybody who has traveled in rural areas understands that cellular coverage is often spotty, or even non-existent. Customers are worried about being cut off from telephony services inside their homes. It’s a legitimate concern for somebody with poor cellular service and with little or no broadband options, like we see in millions of rural homes and businesses.

But the time is coming soon when these transitions will not be voluntary like was done in these two communities. The big telcos will issue the legally required notices, and then they will proceed to shut off and tear down the copper. In doing so they will have undone the original FCC’s goal set by the Telecommunications Act of 1934, which was to make telephone service available everywhere. There are now going to be homes and communities that are going to be cut off from a workable alternative to make reliable voice calls.

I honestly never thought I’d see this happen. But I guess it was the pretty obvious end game after it became clear decades ago that the big telcos were not going to properly maintain their rural copper networks. We aren’t too far from the day when copper telephone networks join the list of other technologies that outlived their usefulness and are a thing of the past – at least for the giant telcos. There are still other companies like Frontier and Windstream that are fighting to extend the life of their copper, but we’ll have to see what the future holds for them and their customers.

FCC Orders Rules for Copper Retirement

FCC_New_LogoThe FCC in Docket FCC 15-97 issued some new guidelines for telcos that are going to cut customers off copper or impair legacy services. The same order also asks further questions in the firm of a Further Notice of Proposed Rulemaking. This docket is part of the ongoing effort that has been called the IP Transition, where the national goal is transition from the traditional PSTN to an all-IP network.

One of the primary results of the order is notice to customers. Notice is of two types – notice to end-user customers and notice to other carriers. The new requirement is to give a three-month notice to residential customers when they are going to lose copper and give a six-month notice to business customers. Phone companies would be allowed to retire and remove copper with no notice as long as no customer service is discontinued, reduced, or impaired.

The order clarifies that ‘retirement’ means de facto retirement such that a carrier changes the service so that legacy products are no longer available. This means that a phone company can’t arbitrarily cut customers from analog copper services to a digital equivalent without supplying this notice. This is something that companies that are upgrading customers from copper to fiber need to take notice of and be prepared to notify your customers in a timely manner before the transition.

The FCC has taken note that there are legacy services that can be impacted by removing copper or from shifting to IP. For example, there are some burglar alarm services that still run off copper phone lines, although most providers of these services can readily switch over to an IP connection. There are also some old fax machines that cannot easily be made to work on VoIP and work only on copper. But for most homes, moving from a copper to a newer network has very little practical effect, except perhaps for the fact that their phones will no longer be powered by the network, which the FCC addressed in another Docket.

There can be a much bigger impact on businesses. I’ve worked with clients recently that are still using numerous ISDN connections and T1s provided over copper. There are also still huge numbers of business key systems and PBXs that are fed by T1s and PRIs. When a telco is going to discontinue these services they often require a business to make a big expenditure. This could entail buying a new phone system, new phones and perhaps even finding a new provider if the phone company can’t supply the new connection they are going to need.

The biggest issue I see with getting rid of copper is where the phone company doesn’t have an alternate landline network ready for the transition. It doesn’t seem like a big issue to me when a company like Verizon wants to move customers from copper to FiOS. There have already been tens of millions of customers who have changed from copper to either FiOS fiber or to a cable company network who have experienced and accepted the required changes.

But AT&T has said that they want to walk away from millions of rural copper customers. That would force customers to migrate to either the cable company or to cellular wireless. This could be a huge problem for business customers because there are still a lot of business districts that have never been wired by the cable companies. And even where a business can change to a cable company network, they are not always going to be able to buy the services they want from the cable company. For example, those businesses might be using trunks or Centrex today that isn’t supported by their cable provider. These businesses are going to be facing an immediate and expensive upgrade cost to keep the kind of service they have always had.

And of course, once you get outside of towns there generally is no alternative to copper other than wireless. As bad as rural DSL can be, having a 1 Mbps DSL connection is still better than having to use cellular data for a home broadband connection. At least DSL has unlimited usage where most cellular data plans have tiny data caps. And unfortunately, there are many rural areas where cell phone coverage is poor or non-existent. Cutting down copper in those areas would be basically cutting homes and businesses off from any communications.

Control of the Future Voice Network

FCC_New_LogoThe FCC is looking at how to transition from the traditional TDM-based PSTN to an all-IP telephone network. A number of carriers have submitted proposals that provide their vision of an all-IP network. Today blog looks at AT&T’s vision of the future IP network.

AT&T has proposed to the FCC that there be a handful of major switching hubs created in the country. Every carrier would then send their voice traffic to these hubs to be sorted and handed back to the various terminating carriers. Their argument is that the whole idea behind the IP transition is that the network be made as efficient as possible; they are promoting this idea as the simplest network to implement.

But is it the most efficient? Over the years I’ve done a lot of traffic engineering, meaning that I’ve helped companies analyze where their voice traffic comes from and goes to. What I’ve seen is that approximately 80% of voice traffic for most companies stays in a relatively small circle of perhaps 60 miles. This distance can vary a bit by company depending on how far away they might be from a major metropolitan area, but this basic traffic rule seems to apply pretty much everywhere I’ve looked.

So let me first look at the practical application of what AT&T is proposing. One would have to assume that if there was only a handful of nationwide interconnection points that they would be put in the same places as the major internet hubs – Atlanta, Chicago, Washington DC, New York City, Dallas, etc. What this idea means is that states not near to those hubs—say Montana, Nebraska, Maine, etc. would have to ship all the voice traffic from their state to the nearest big hub and back again.

While it might be more efficient to have only a few hubs, it certainly would not be efficient from a transport perspective. Somebody has to pay for all of that transport to and from the main hubs, and that is the real purpose behind the AT&T proposal. Under their proposal carriers other than them would pay to have all traffic brought to these main hubs. That is a major change from the way the industry works today.

Today there are two different sets of transport arrangements—one for regulated telcos and one for competitive CLECs and other kinds of carriers. Regulated companies today provide joint trunking between each other. For instance, if there is a fiber route between AT&T and another telco, AT&T generally owns the part that is within their territory and the other telco owns the part in their own territory. Sometimes this is negotiated differently, but under this arrangement both sides bear some of the cost of carrying voice traffic.

CLECs and other competitive carriers have a different situation. CLECs are allowed by the Telecommunications Act of 1996 to establish a point of interface (POI) at any technically feasible spot within a LATA (or region). Once that point is established, the CLEC is responsible for all costs on their side of the POI and AT&T (or Verizon or CenturyLink) is responsible for the costs on the other side of the POI.

AT&T’s suggested new network gets rid of both of these arrangements and instead moves all of the points of interconnection to the small handful of locations, and in doing so shifts 100% of the cost of the transport onto other carriers.

In a further money grab, AT&T would (as the assumed owner of these large hubs) charge a fee to other carriers for handing traffic from carrier to another. These fees exist today and are called transit fees. But today transit fees are charged on a relatively small percentage of voice calls since there are no fees charged for all of the jointly-owned arrangements I described above. Instead, under this new arrangement there would be a transit fee charged for every call that is handed from one carrier to another.

AT&T’s proposal is ridiculous for several reasons. First, the transit fees are not cheap and they cost more today than the traditional access charges that the FCC has been trying to eliminate. So AT&T’s proposal would increase the cost of making voice calls. The proposal is also a blatant attempt to shove all of the cost of carrying voice traffic to somebody other than AT&T. And finally, it forces companies to carry calls a much greater distance than they go today. This likely will lower call quality and increases the danger of the voice network going down due to a fiber cut or other network problem.

There is a much simpler alternative to what AT&T is suggesting, which is to let carriers negotiate how and where they hand off traffic. There are already huge numbers of local and regional interconnection points in existence, most established to hand-off local traffic in the local market. Carriers should be free to continue to use arrangements that work and with which they are happy. Think of these local arrangements as voice peering arrangements and they quickly make technical sense. Nobody is going to be unhappy if local connections transition to IP instead of TDM. But making the IP transition doesn’t mean that the whole nationwide network has to be massively reorganized. That is far more inefficient and costly than letting carriers find their own solutions.

The FCC’s Plate is Full

FCC_New_LogoI don’t think I can remember a time when the FCC had more major open dockets that could impact small carriers. Let’s look at some of the things that are still hanging open:

Net Neutrality. This is the granddaddy of all FCC dockets, if for no other reason than the number of responses filed in the docket. The network neutrality docket asks the basic question if there is any legal mechanism that the FCC can use to ensure that the Internet remains open. The public debate on the issue has concentrated on discussion of whether there should be Internet fast lanes, meaning that some companies could buy priority access to customers. Of course, the flip side of that question is if most of the Internet can be made slower in favor of a handful of large companies willing to pay a premium price to ISPs to be faster.

The issue has become political and there are polarized positions on opposite sides of the topic. The large players in the industry have also lined up in predictable ways with the giant cable companies and telcos against any form of regulation on broadband and almost everybody else on the opposite side of the fence.

Municipal Broadband. Petitions filed by Chattanooga TN and Wilson NC prompted the FCC to investigate if they should overturn the various state restrictions against broadband. There are roughly twenty states that have some sort of restriction against municipalities either entering the business or for operating as a retail provider of services. In some state there is an outright ban against any form of municipal broadband competition. In others, municipalities can build networks but can only provide wholesale access to the networks.

This issue is a classic case of pitting states’ rights against the ability of the a federal agency to preempt them. The FCC has overturned numerous state laws in the past and certainly has that ability in terms of telecom law. But in most past cases the FCC overturned rules established by state commissions and here they would be overturning laws created by state legislatures. There are a number of states that say they will sue over the issue as well as some members of congress that are vehemently against overturning state laws.

IP Transition. The IP transition can have huge repercussions on LECs and CLECs. At issue is the replacement of the traditional TDM network with an all-IP network. From a technical perspective this transition if very straightforward and the carrier world is already in the process of implementing IP connections in the voice network.

But there is a long list of carrier compensation issues that are tied deeply to TDM network rules that must be dealt with. For example, one the primary principles that help to make CLECs competitive is that they can choose to meet incumbent networks at any technically feasible point of their choice. The RBOCs view the IP transition as a way to change this balance and they want CLECs to pay to bring all voice traffic to them.

And rural consumers have a huge stake in this docket since the large telcos see this as an opportunity to ditch customers on rural copper. AT&T, for example, has made it clear that they would like to cut the copper to millions of rural customers.

Mergers. The FCC is processing two large merges between Comcast and Time Warner and between AT&T and DirecTV. The Comcast merger is the one with the most practical market consequences since it merges the two largest incumbent cable companies. The cable industry already suffers from the lowest customer satisfaction among all industries and the two companies are near the bottom of the pack in the industry.

So customers are worried that the merger will lead to even worse service. And competitors worry that the mega-company that would result from these two mergers will have too much market power. The FCC Chairman Tom Wheeler has publically expressed some concern about this merger being good for the industry, so it doesn’t sound like a slam dunk.

Internet TV. The FCC is looking at whether it should regulate Internet TV. For example, should a channel line-up broadcast over the Internet have to follow the same rules as a broadcast over a cable network? This ruling is going to have a huge influence over how small companies deliver cable TV.

Everything Else. In addition to these big issues the FCC has a lot of other open dockets. Some of them are relatively small, such as the docket that looks at whether the FCC should regulate robocalls. But some cover large issues, such as the docket that is examining how the FCC sells wireless spectrum.

AT&T’s IP Transition

telephone cablesA few weeks ago I talked about how Verizon and AT&T are using the FCC’s IP Transition to try to get out of serving regulated services on copper landlines. Today I want to talk more about AT&T. Earlier this month they met with the FCC staff to talk about their ideas on the IP transition and they followed up that meeting with this memo.

The FCC’s IP Transition looks at replacing the PSTN (Public Switched Telephone Network). This is the complex network that has been used to carry voice traffic and that assures that every call attempted ought to be completed. It’s now an old network, is separate from the Internet and it still mostly uses time division multiplexing technology (TDM) that is based upon using circuits that are some multiple of T1s.

The PSTN has served the country well, but pure IP technology is a lot more efficient and the FCC is working towards replacing the PSTN with something new and IP-based. The PSTN is a series of connections, called trunks that connect the central offices switches of all of the carriers in the country along with the electronics that control the network. It’s important to note that the PSTN is only the network between carriers and does not involve any connections to customers. The PSTN has always been technology agnostic in terms of supporting any kind of network such as copper, coaxial or wireless and in allowing any kind of phone or customer device as long as a carrier can locally support it.

But the PSTN network is more than just the wires connecting carriers because it includes things like the SS7 network that is used along with each call to transmit the calling number and other information. And the PSTN comes with a number of specific regulatory requirements that define the ways that carriers of different types can interconnect with each other. The FCC’s major role in this process is to rework all of the rules that define how carriers interact in the new IP world. So the FCC is being careful in dismantling the PSTN because if it’s done incorrectly there could be chaos between carriers and even problems in completing calls. Before they order a mass migration from the PSTN the FCC has authorized a number of trials to convert parts of the PSTN to IP to look in detail to make sure that everything works as hoped.

But AT&T and Verizon have hijacked the IP Transition and persist on using it as an excuse for replacing copper connections with something else. In the case of AT&T they talk about wanting to replace millions of home phones on copper with cellular. The FCC’s IP Transition never intended to require or be associated with changing technologies used by customers. The FCC must be getting very frustrated to see AT&T and Verizon continuously blame them for the changes they are trying to foist on customers. I’m actually somewhat surprised that the FCC hasn’t told them to knock it off. If I was the FCC I would be telling customers that it is not my intention to kick people off of copper. There is no technical or regulatory reason that copper networks can’t work with an IP version of the PSTN.

As you can see by this memo, AT&T intends to kick people off copper in several communities as part of what they call Technology Trials. But they don’t want to say ahead of time where those communities are because they know full-well they will be met with a lot of resistance. It’s funny that AT&T says they don’t want to divulge where their trials will be done due to fear of how competitors will act. The only competitors that benefits from AT&T’s plan will be the cable company in each town which will pick up most of the abandoned customers along with AT&T’s own cellular business. It’s incredibly unlikely that the cable companies are going to find any problem with AT&T’s plans or that releasing the information early would somehow give the cable companies some kind of edge.

AT&T has some really great writers and their memos always sound very logical and well thought out. This memo certainly seems reasonable if one didn’t understand what they are actually talking about doing. They want to knock people off copper, wait until the last possible minute to announce who that will be, and then blame it on an FCC as part of the IP Transition. AT&T will largely be forcing customers to the cable companies if they want landline voice or data.

One might not think this is all that bad of a thing. After all, the copper is getting old and perhaps it is time for it to go. But a large part of the reason rural copper is so bad is from years of neglect. One might not feel so bad about people living in small towns who end up having to go to the cable company if AT&T bails on a town. But you have to realize that small-town cable networks are sometimes in worse condition than the copper. And in most places, if AT&T shuts down the copper then the cable company becomes the only game in town.  One really has to feel bad for the people who live outside rural towns, outside the reach of the cable companies. They are going to lose the only wire to their homes.