January 17, 2013

FCC and the Enterprise: Why Should You Care?


This TechNote looks at the FCC's focus on broadband deployment and the significance to the enterprise customer.

During the past several years, the FCC has implemented its National Broadband Plan looking to accelerate broadband deployment, a move that will promote economic growth and efficiency.  The FCC has allocated more spectrum for wireless broadband and pushed services providers to offer broadband services at progressively higher data rates. The agency has also taken steps to ensure an "open" Internet, and focused its Universal Service Fund (USF) program on supporting broadband in rural areas.  

Spectrum Management

The FCC sets spectrum policy and assigns licenses to wireless carriers and commercial entities along with state and local governments.  It determines which frequency bands are allocated for unlicensed operations such as Wi-Fi.  Increasingly, Congress has intruded into spectrum policy making, mainly in an effort to generate revenues for the U.S. Treasury through spectrum auctions. An exception was legislation enacted in 2012 allocating the 700 MHz D-Block for a public safety broadband network.  

 Beginning with the reallocation of the 700 MHz band from UHF-TV to wireless, the FCC has focused on making additional spectrum available for wireless broadband. The FCC is acting upon or considering proposals from Dish Networks, LightSquared and Globalstar, respectively, to re-purpose satellite spectrum for terrestrial broadband use.  That's despite rejecting a similar proposal due to projected adverse impacts to GPS operations. Reallocating or sharing Federal government spectrum is another avenue being pursued. 
 
The FCC has initiated steps to conduct "incentive auctions."  TV Broadcast station licensees could then opt to allow the FCC to auction their broadcast station licenses (and share the revenues) with the objective of making more spectrum available for wireless broadband.   As a result of industry consolidation, the FCC is evaluating whether to retain or modify its criteria for evaluating mobile spectrum holdings in the context of transactions and auctions,  The FCC could also adopt  caps or limits on spectrum holdings either overall or within particular frequency bands that a carrier may hold. 

Promoting Broadband Deployment
 
Apart from spectrum decisions, the FCC has adopted major decisions to promote broadband deployment.  In its 2010 Net Neutrality Order, the FCC acted to ensure the dominant Internet service provider (ISPs)--Verizon, AT&T and the major cable operators--do not exercise control over or limit access to web sites or otherwise impair an open Internet.  That makes the ISPs largely responsive to the interests of the major Internet/technology companies--Google, Amazon, Microsoft, and Apple--and public interest groups. The courts' resolution of Verizon's appeal of the Net Neutrality Order will determine whether any or all aspects of this decision will survive long term.  At the 2012 World Conference on International Telecommunications ("WCIT"), the United States is advocating that the Internet should not be subject to international telecommunications regulation and free from content regulation/censorship by national governments. 

In 2011, the FCC adopted its USF Reform Order to redirect USF support to persons lacking access to high-speed broadband services, creating the Connect America Fund and Mobility Fund.  Unfortunately, funding USF is increasingly problematic because the USF contribution rules were developed during 1995-1997, prior to the emergence of wireless and the Internet.  The USF contribution factor is currently 17.4% of carriers' "telecommunications services revenues" (with lower contribution factors for Wireless voice and VoIP services).  Carriers are allowed to recover their USF contributions from end users.  Revenues derived from wireless and wireline broadband services are not subject to USF assessments. The FCC has initiated a proceeding to address this USF revenue challenge.  
Migration to All-IP Networks 

The National Broadband Plan viewed the transition to all-IP networks as a critical step to nationwide broadband deployment.  Local wireline networks have lagged in this transition.  AT&T filed a petition November 7, 2012 ("Petition to Launch A Proceeding Concerning the TDM-to-IP Transition") requesting the FCC grant local exchange carriers the option to conduct "trial runs of the transition to next-generation services, including the retirement of .  .  . [TDM (Time Division Multiplexing)] facilities and offerings and their replacement with IP-based alternatives." AT&T is looking to eliminate regulations that either impede this transition or extend legacy telecom regulation to an all-IP services environment. On the same date, AT&T announced "Project Velocity IP", a series of planned investments intended to deliver broadband (either wireline or wireless) to all customers served by its legacy local telephone networks.  

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The FCC's commitment to broadband and support for all-IP networks is encouraging services providers to transition to IP technology and services, sending a clear message to enterprise customers: Deferring migration to IP services and investments in IP technology is no longer prudent or wise.


3 Comments

In light of the current regulatory environment, what changes should enterprises consider for 2013?

Move intra-corporate voice requirements to Voice-over-MPLS. The USF surcharge on circuit switched interexchange voice services is too substantial to ignore.

Douglas,

In the article above you said that "Increasingly, Congress has intruded into spectrum policy making." Congress defines, controls and funds the FCC. It is upside down to think that Congress is "intruding" when it gives specific direction to its creation or makes policy about matters in the FCC's purview. Going further, I would say that the assignment of too much policy-making autonomy to agencies such as the FCC is a major cause of regulatory bloat.

Prayson Pate

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