For several years, the major incumbent local exchange carriers (ILECs) have been heralding the benefits of transitioning their networks to IP technology. The FCC has supported this transition. Agreeing that “less is often more” and reviewing related decisions in one entry may be helpful, this entry highlights the FCC’s recent decisions on policies and procedures for implementing the IP transition.

• 2015 IP Transition Report and Order
  • Copper loop retirements
  • Discontinuing TDM wholesale services (special access services and wholesale voice platform services) and deploying replacement IP services, and
• 2016 IP Transition Report and Order
  • Discontinuing TDM retail voice services and deploying replacement IP services

This is the 1^st entry in a two part-series. Implications for end users and competitive carriers will be the focus of the 2^nd entry.

The rules on copper loop retirements and the IP transition for retail voice services apply to price cap and rural rate-of-return ILECs with minor distinctions. The rules on wholesale services pertain principally to the price cap ILECs as these carriers offer the vast preponderance of special access and wholesale platform voice services. The FCC deserves a “tip-of-the-hat” on these decisions; the agency evaluated the merits of numerous positions and made reasonable decisions on countless issues.

An important caveat is that each ILEC sets its own plans and time lines for implementing its IP transition. There are no deadlines or due dates. Subject to the rules adopted in these FCC decisions, the ILECs may implement their IP transitions locally, state-wide or throughout all of their service territories. The same is true for copper loop retirements.

The procedural paths that include notices to customers or competitors vary.

Copper Loop Retirements. The FCC updated copper retirement rules that had been in effect for years.  Importantly, the copper replacements are subject to notice obligations, but not FCC approval. Two major changes are (1) the agency declined to allow oppositions or objections to notices of copper loop replacements, but imposed a “good faith communication requirement” on ILECs to provide additional information so that interconnecting services providers can implement changes in their networks without service disruptions, and (2) increased the notice period to just over 180 days.

Each ILEC is required to provide notice of a copper loop retirement to the Commission on the same date it provides notice “to each information service provider and telecommunications service provider that directly interconnects” to the ILEC’s network as well as changes in prices, terms or conditions associated with a copper loop retirement. The Commission then issues a Public Notice announcing the filing, effectively starting the 180-day period. Within 90 days of the date of this Public Notice, the ILEC must submit a certification that attests to timely notifications and other matters.

In addition, an ILEC must provide 180 days written notice (via mail or e-mail if authorized by the customer) of copper retirements being replaced by FTTP services to business customers and schools and libraries, and 90 days to residential customers. The FCC declined to require the ILECs to make available retired copper loops to CLECs, but encouraged ILECs to negotiate the sale of abandoned copper loops.

The rules are now in effect. Among others, Verizon and CenturyLink, are implementing copper loop retirements, identifying retirement projects by reference to affected wire centers.

Wholesale Services. In order to discontinue wholesale services (special access services and wholesale voice service platforms), each ILEC must file applications to discontinue service under Section 214 of the Communications Act. In addition, the FCC denied USTelecom’s Petition for Reconsideration of the declaratory ruling in which the FCC concluded that the term “service” in section 214(a) is defined functionally and not solely by service definitions in ILEC tariffs.

Broadly speaking, ILECs must establish that replacement IP wholesale services are “reasonably comparable” to the existing TDM services in terms of capacity, price and quality of service. For example, 100 Mbps Ethernet access service priced at market rates is not a reasonably comparable replacement for DS-1 special access service; substantially more bandwidth priced at a noticeably higher rate is not “reasonably comparable.” Importantly, “price-per-Mbps” and the net cost of the IP replacement special access service cannot be significantly higher than the pricing for the DS-1 or DS-3 service being replaced.

As a Section 214 discontinuance application is filed with the FCC, a copy must be served on the ILEC’s customers—CLECs, IXCs, wireless carriers and end users that acquire special access services directly from ILECs—as well as government offices specified under Section 214. Assuming the ILEC’s application meets the “reasonably comparable” standard, the FCC will “automatically grant” an ILEC’s Section 214 discontinuance application thirty (30) days after the application is placed on Public Notice.

This “reasonably comparable” standard is an interim rule, subject to the outcome of the FCC’s ongoing investigation into the price cap ILECs’ rates, terms and conditions for special access services—particularly DS-1 and DS-3 services. A final decision in the FCC’s multi-year special access investigation is expected this fall.

Rather than move forward under rules that will expire as the IP transition concludes, USTelecom filed a petition for review with the D.C. Circuit. Pet. for Review, United States Telecom Assoc. v. FCC, et al., Case No. 15-1414 (D.C. Cir., Nov. 12, 2015). USTelecom maintains that Section 214 does not require ILECs discontinuing wholesale TDM services to consider the impact on competitive carriers’ customers, the FCC’s Declaratory Ruling is inconsistent with Section 214 and applicable precedent, and the “reasonably comparable standard” should not apply pending the outcome of the FCC’s special access investigation.

Retail Voice Services. The FCC’s decision to facilitate the IP transition for retail wireline voice services also establishes a series of rules for “automatic grants” of ILEC Section 214 applications to discontinue TDM retail voice services. If the requisite showings are made, the ILECs may begin the transition to IP services 31 days after the applications are filed. In addition to customer notices (via mail or e-mail as authorized by a customer), the ILECs must engage in community outreach activities on the IP transition.

In support of this flexible approach, the FCC determined that the market interstate switched access services (which is tied to TDM technology) is competitive, noting the migration to wireless voice services and VoIP services have largely eroded the relevance of ILECs’ switched access services.

In addressing retail customers’ concerns, the FCC requires that replacement IP wireline voice services must (i) have substantially similar network performance metrics (latency of 100 ms or less for 95% of all peak period round trip measurements and data loss not worse than 1% for packet-based networks); (ii) maintain service availability at 99.99%; and (iii) cover the same geographic footprint as the discontinued TDM service. These criteria are intended to be technology neutral; thus, a fixed wireless replacement that meets these criteria is an acceptable replacement technology. Each ILEC must certify that each IP service “platform” meets these requirements; in order to do so, the ILEC must follow the FCC test procedures, except ILECs having 100,000 or fewer subscribers may use other test procedures.

The cost of the replacement IP service cannot be substantially more than the TDM voice service being discontinued. The IP replacement services must support critical applications such as 9 1 1 and access for persons with physical disabilities and must be interoperable with widely adopted low-speed modem devices, such as fax machines and point of sale terminals, through 2025.