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Nationwide Competitive
Local Exchange Carrier


Tele-Tech Updates

April 2014

Telecom Executives Provide Insight on Future of Copper

By Kim Russo, Co-President

One of the general sessions at the March COMPTEL PLUS convention in Las Vegas covered an important topic weighing heavily on the industry right now, and one for which the FCC has recently started the proceeding process: the future of copper networks.

I’d like to share with you what senior executives from major service providers had to say about their companies’ visions for the future, and how the transition from TDM to IP will play out in regards to the use of the legacy network.

Although AT&T has been a strong leader in moving to the IP network, with a goal of doing so by 2020, Gary Ludgood, Senior Vice President of Global Network Field Operations, shared that copper is still a part of the company’s future plans.  
“Retiring TDM service doesn’t eliminate copper,” Ludgood said.

For now, AT&T’s next steps on the transition to IP are to accelerate product development for IP based services and to work on IP trials that will test the use of an all IP network.  

No one expects that AT&T and other incumbent service providers will support the copper network forever.  Ludgood discussed the difficult economics of supporting underutilized resources as customers transition from traditional voice services, and suggested that while retiring the legacy network will eventually happen, we aren’t at that point today.  

“How many customers do you need to lose on a switch before doing something (different)?  Today that number is all of them,” Ludgood said.

Granite Telecom, whose business model is based on purchasing wholesale service from other carriers in order to serve large businesses, including Fortune 100 and retail companies with many locations, stressed the need for the continuance of wholesale offerings. 

Sam Kline, Senior Vice President of Corporate Strategy, discussed the flaw in thinking that copper is dead, calling it a myth that customers are rapidly migrating from copper networks to IP based technology.  For many businesses, an acceptable alternative (in terms of price, quality, etc.) is not available, Kline said.

Kline called the transition akin to gravity, in that it’s a force that can’t be stopped.  

“More cost effective and technologically advanced services will be introduced and accepted, and providers will have to adapt,” Kline said, noting that it doesn’t make economic sense to maintain outdated or inefficient networks.  

In support of wholesale arrangements, and in criticism of some large carriers that threaten to stop offering long-term wholesale agreements, Kline added that it doesn’t make sense for everyone to have a distribution network, and it doesn’t make economic sense to force government regulating by refusing to find a reasonable business process to work together.

Kline urged competitors to accept the reality of new technology, accept the reality of a cost effective replacement for outdated technology, and to continue to compete through innovation, superior service, and quality.

He urged the ILEC community to accept wholesale competition, to provide new infrastructure-based products at similar price and quality parameters to what is offered today, and to work with the competitive community to develop, but not dictate, how competitors and ILECs will work together.

One criticism of the current plans for IP trials is that they do not include wholesale carriers.  AT&T’s Ludgood downplayed the absence of wholesale carriers, reminding the audience that AT&T is currently required to provide wholesale service.  

“The trials are for experience and to learn what works and what doesn’t.  They don’t change any rules or regulations we’re under now,” Ludgood said.

Kline countered by saying he’s curious how wholesale will work going forward, both financially and technically.  

“That’s lacking in the trials right now,” Kline said.

Read how the FCC plans to document the IP transition trials.

FCC Increases 2014 Local Rate Floor to $20.46

The FCC has set a new rate floor of $20.46 for eligible telecommunications carriers (ETCs).

The Wireline Competition Bureau announced the change March 20, after completing a survey initiated on December 16, 2013.

The Bureau is now considering a petition from rural associations, to extend the compliance deadline from July 1, 2014 to January 2, 2015.

In order to continue receiving high-cost loop support, rural carriers are complying with an FCC mandated three-step rate floor.  Local residential calling rates increased to $10 in July 2012 and $14 In July 2013.

The national urban average at the time of the first rate increase was $15.47.

Along with the 2014 local rate floor, the FCC set the reasonable comparability benchmark for voice services at $46.96.

Read the Public Notice here.


Petitions for Reconsideration Criticize Expense of Rural Call Completion Order

The FCC issued a Public Notice February 4, 2014 announcing that the following organizations had filed Petitions for Reconsideration (PFR) in the Rural Call Completion proceeding.

  1. Transcom Enhanced Services, Inc.
  2. Comptel
  3. Carolina West Wireless, Inc.
  4. Sprint Corporation
  5. United States Telecom Association (USTelecom) and the Independent Telephone & Telecommunications Alliance (ITTA)

The Rural Call Completion Order, approved in October 2013, requires covered providers to record, analyze and report all long distance call data on a quarterly basis, with data to be retained for six months.

Call records must be analyzed and reported on separately for each rural operating company to which calls are delivered, and in aggregate for all other operating companies.

Providers must also report the cause of uncompleted calls to rural carriers and include SS7 signaling cause codes.

What the Petitions Say
Transcom argues that the new rules burden non-carriers with carrier obligations.  It’s asking the FCC to revise Rule 64.2201, which addresses false ring tones, so it only applies to common carriers.

Comptel contends that the final small carrier exemption is substantially narrower than the proposed exemption. By changing the exemption from 100,000 or fewer customers to 100,000 or fewer customer lines, Comptel believes the number of small long distance service providers required to comply with the record keeping, reporting and retention rules increased by 150 percent. The final rule now puts 225 providers, rather than 90, under reporting obligations.

Carolina West Wireless also wants changes made to the exemption clause, by amending the definition of a covered provider, so that lines served by non-controlling minority owners are not counted toward the 100,000 line threshold.

Sprint doesn’t believe the FCC should use call completion reports as a basis for enforcement action, because it hasn’t defined call completion expectations for providers. In it’s PFR, Sprint stated that “Raising the specter of enforcement action against long distance carriers (to the exclusion of all other parties) based on the mandated reports is unreasonable and arbitrary given that, in many cases, the cause of an incomplete call cannot be determined based on the mandated report or is attributable to factors outside the carrier’s control.”

Additionally, Sprint wants an independent review of the rural call completion surveys that led to the order. The carrier also cites cost as another factor for reconsideration, estimating costs of $6.8 million annually for the company to comply. Sprint mentioned in its petition that AT&T would spend $3 to $5 million, CenturyLink up to $10.5 million in one time costs, plus up to $4.3 million in annual data storage costs.

USTelecom and ITTA also point to cost, saying most ILECS and CLECS lack the ability to collect and report call attempt data for intraLATA interexchange/toll calls, either carried entirely over the originating LEC’s network or handed off by the originating LEC directly to the terminating LEC.

USTelecom/ITTA argues that this type of call data is not only costly to collect, it wouldn’t provide information helpful to addressing the problem. The group estimates a $100 million impact on the industry, with implementation taking 18-24 months.

Opposition to the Opposition
On March 4, 2014, the Rural Associations, comprised of the National Exchange Carriers Association (NECA), WTA – Advocates for Rural Broadband, NTCA – The Rural Broadband Association and the Eastern Rural Telecom Association (ERTA), filed opposition to the PFRs.

In response to the USTelecom/ITTA petition, the Rural Associations want the Commission to analyze a year’s worth of data before making any revisions. However, if the USTelecom/ITTA Petition is considered, the associations ask that the Commission narrowly tailor changes to encompass only the intraLATA traffic that is carried entirely over an originating carrier’s network or is passed directly from an originating carrier to a terminating one.

In response to Sprint’s filing, the Rural Associations reminded the Commission that it has already determined the harm caused by call completion problems outweighs any cost of implementing the new rules.

The opposition rejects Transcom’s claim that the new false ring tone rule unlawfully imposes common carrier obligations on non-carriers as being ineligible for reconsideration, since Transcom is bringing up the issue for the first time in this proceeding.

What’s Next?
Carriers are still waiting on the data collection rules to go into effect. The Office of Management and Budget must first approve the information collection requirements.

The false ring tone rule became effective January 31, 2014. The rest of the order went into effect January 16, 2014, except for the actual data collection rules.

NANPA Q1 Recap

  • California: NPA 628 to overlay NPA 415; effective March 21, 2015
  • Ohio: NPA 220 to overlay NPA 740; effective April 22, 2015.
  • South Carolina: NPA 854 to overlay NPA 843; effective October 19, 2015.
  • Nationwide: NANPA has initiated the assignment of 577 NXX codes.

Q2 Contribution Factor

The proposed Universal Service Fund contribution factor for Second Quarter 2014 is 16.6 percent, up from 16.4 percent in the previous quarter.

KFR News