As the communications industry finds itself with a furloughed FCC in the wake of the government shutdown, top policy executives from Verizon, AT&T and T-Mobile took the stage at TIA 2013 to discuss regulation and the future of networks. A key theme in the discussion was the gap between regulation and market realities.
At issue? While the innovation cycles for technology are now down to less than a year, the regulatory framework is more than 20 years old, having not been really updated since the Telecom Act of 1996.
“The convergence of technology and the pace of innovation are accelerating,” said Verizon policy chief Craig Silliman. “Wired and wireless are becoming interchangeable and seamless, and soon customers won’t think about whether they’re connected with Wi-Fi or wireless or how nearby the fiber connection is. We’re reaching a point where the FCC and the regulations and the statutes in place will spike innovation if we don’t modernize.”
The panelists also argued that aging regulations curb investment. “If you take a historical perspective, regulation acts as a barrier to entry and protects legacy business models,” said Jim Cicconi, senior executive vice president of external and legislative affairs at AT&T. “But we are in a world where innovation has to happen at the speed of customer demand, and you want lots of companies investing and low barriers to entry to support that.”
Wireless for instance is notable success story in the U.S. as the nation leads the world in LTE deployment. That’s because the FCC has taken a hands-off, light-touch approach to wireless, so investment has been continuing, Silliman posited.
“But consider that Google has launched a fiber service [in Kansas City], but has decided to not deploy voice, which is just an app, because it didn’t want to face the tangle of regulatory frameworks,” he said. “How many decisions are being made like that every day, where people say, I could innovate on fixed communications but…it’s better not to go there. This is a huge chilling effect on investment and innovation.”
Cicconi added that carriers are not just calling for less regulation, but also parity across network types. “We’re seeing a massive technological convergence of networks, but there has been uneven regulatory application,” he said. “Cable, when it switched to DOCSIS 3.0 didn’t need permission from the FCC to do so, and we didn’t need it to move from 3G to 4G. Yet if we want to upgrade a TDM facility, we’re not allowed to on our own, and we have to get permission under legacy regulation, much of which was designed in 1934. We need to follow what the market demands instead.”
For instance, the FCC has a target for communications networks to convert from TDM to all-IP by 2017. “We’re here in 2013 and not a single thing has been done to achieve that goal,” Cicconi said. “2017 is likely not achievable—so we’re looking at 2020.”
AT&T last fall proposed a trial to be run by the Commission to test the process at two of its 4,500 TDM wire centers. Its petition however was denied. “The FCC rejected the concept of experimenting towards an objective that they themselves set,” Cicconi said.
“We all understand there is a place for regulation—including public safety, consumer protection and there are a number of other areas where regulation is an appropriate response,” said Thomas Sugrue, senior vice president of government affairs at T–Mobile. “But what we’re facing is the fact that in practice, we have regulations that were designed for a very different set of problems than we have now, that are being applied to circumstances for which they weren’t designed.”
Going forward, the situation will only get more stark as capacity requirements increase, the panelists said. “We see two overarching trends,” explained Craig Silliman, senior vice president for public policy at Verizon Communications. “Devices increasingly use broadband and mobile broadband access to tap cloud resources, like music and video, and the need for capacity is driving a lot of the investment. Also the growth in machine-to-machine connections is something we’re all anticipating.”
