How did we get into this mess?
This article was originally published in 2013 and it supplies a very scary history of how Corporate America has taken over the FCC, with the help of Chairman Ajit Pai and Commissioner O’Rielly. This shows the direct correlation between the FCC’s current 2017 plans and how they were handed to then-Commissioner Pai by AT&T way back in time. More importantly, it is clear that Pai and O’Rielly are using this AT&T-ALEC play book to erase consumer protections, stop oversight of AT&T, Verizon, CenturyLink and the cable companies, block competition and remove any obligations to have to offer service, even though these companies are still state utilities.
And worse, this started under the Democrat FCC administrations but is now being rammed through by this Republican FCC.
However, besides the history, on May 5th, 2017, Commissioner O’Rielly spoke at ALEC’s Communications & Technology Task Force, asking for ALEC to help bring down Net Neutrality, claiming it is about Internet Freedom— a euphemism for ‘freedom’ for the phone and cable companies, with the government protecting them from competitors or any public obligations..
Connect the Dots: 2013: AT&T Petition and ALEC State Model Legislation
In the previous 2013 post we examined the state-based ALEC model legislation that was created by AT&T et al and how it was used in some states, including Florida.
However, the ALEC model legislation was created by AT&T; the fact that AT&T filed a petition with the FCC to finish the ALEC state-based campaign at the federal level should come as no surprise.
In December 2009, AT&T filed comments with the FCC as part of National Broadband Plan titled “The Transition from the Legacy Circuit-Switched Network to Broadband” which laid out, in detail, the AT&T-ALEC model of the future — remove as much regulations and obligations as possible.
In 2009, AT&T et al got the FCC to create a group within the FCC’s Technological Advisory Council (TAC) to start the process of “sunsetting” — i.e., closing down America’s utility networks — the Public Switched Telephone Networks (PSTN). As we discussed, TAC is as model of regulatory capture. AT&T and Verizon, (two of the largest incumbent phone companies who control the PSTN in their states) are not only on the committee but the majority of the TAC members have direct financial ties to either AT&T or Verizon or both.
Moreover, the TAC has been headed by Tom Wheeler, who is the Obama nominee for the new chairman of the FCC, replacing Julius Genachowski — and was former head of the cable association, the NCTA, and the wireless association, CTIA.
In August 2012, AT&T set the stage with a letter to FCC Commissioner Ajit Pai, outlining the ALEC principles.
In November 2012, AT&T followed up with a petition to the FCC to start the process to close down the networks, claiming that this was done because of the aging copper networks and that they were moving toward using Internet protocol services — such as VOIP.
Around the same time, the TAC announced their conclusions: that the networks should be ‘transitioned’ — meaning closed, agreeing with AT&T.
In December, 2012, the FCC started a “Transition Task Force“ to make recommendations to start this “sunsetting” process.
And on May 10, 2013, the FCC agreed with AT&T, in part, and has started the path for trials to ‘transition’ the PSTN.
The irony of all of this: AT&T’s entire U-Verse broadband and cable service is based almost entirely on the PSTN and uses the old copper wire that was already in place. And U-Verse already offers VOIP-based service over these old wires as AT&T’s digital voice service.
Thus, the goal is to allow AT&T to remove all basic obligations and regulations on both the state and federal level. This is not some technology change.
ALEC Communications Bills
All of these actions are based on a massive state and federal campaign that has been part of the ALEC legislation and principles, which were crafted by AT&T and the other companies.
In Part 1 we detailed the ALEC bills including the ALEC Regulatory Modernization Act from 2009 which strip-mines almost all regulations and oversight. Here is the exact language from their model legislation. It says, after the first year, the state commission shall not exercise jurisdiction over phone service. It can’t examine the rates being charged, the terms and the condition of the service; it can’t examine quality of service or most importantly can’t do anything if the company decides to ‘exit’ the business — i.e.; stop providing service.
“Section 6. Basic Telecommunications Service - Long Term Beginning one year after the date the written election is submitted to the Commission pursuant to Sec. 1, the rate transition period ends and the Commission shall not thereafter exercise jurisdiction over basic telecommunications service of the Electing Provider, except as expressly stated in this Act, including but not limited to rates and charges, terms and conditions of service, filing of schedules or tariffs, market entry or exit, depreciation requirements, quality of service, long term financing arrangements or other obligations, asset sales, mergers or acquisitions or any other aspect heretofore subject to the jurisdiction of the Commission.”
The AT&T FCC petition is designed to complete the loop, bringing the ALEC principles to the FCC and then Congress. ALEC’s John Stephenson said as much in an interview with Communications Daily:
“‘This is a clarion call for Congress and the FCC’ to reform the Communications Act, the American Legislative Exchange Council’s John Stephenson told us. ‘It’s showing the federal government a possible way forward on communications law.’ Stephenson, director of ALEC’s Communications and Technology Task Force, counts at least 26 jurisdictions that recognized the need for what he calls a ‘new regulatory framework,’ no longer from the Ma Bell era.”
AT&T’s FCC Statements and the ALEC Principles
Let’s get specific and outline exactly what AT&T has said at the FCC to show how the AT&T-ALEC model legislation is now at the FCC, using the same topic areas we identified in Part 1 (highlighted in the opening chart.)
Source Materials: We will use the AT&T 2009 comments, the AT&T letter to Ajit Pai and the petition as source materials.
- Remove Oversight by State Commissions
- Remove “Quality of Service”
In 2009, AT&T’s started the federal ball rolling with comments outlining that the states should not have jurisdiction over broadband and it should be the exclusive purview of the FCC — read federal law. Moreover, regulations should be removed on virtually all aspects of their business that would be applied by either the FCC or the commission — including removing service quality requirements.
AT&T’s Comments 2009
“AT&T’s view is that the assertion of federal jurisdiction over broadband and IP-based services is critical to the success of the transition, and that assertion will itself serve to eliminate certain vestigial aspects of federal and state telecommunications regulations (including, for example, separations-related requirements). But certain state and federal public- utility style regulations may remain - e.g., service quality requirements, reporting, record-keeping, data collection, accounting, and other requirements - that could impede the transition.”
This theme is repeated in AT&T’s letter to Commissioner Ajit Pai, August, 2012. The company writes that it was time to get rid of “regulatory underbrush/superstructure” — i.e., remove all regulation and data collection that’s still being applied.
“Eliminate regulatory underbrush/superstructure that accompanies TDM-based services. For example, phase out equal access, record-keeping, accounting, guidebook, dialing parity, payphone, and data collection (which should be limited to that which is collected on the Commission’s Form 477) requirements. Following the transition, all asymmetric regulatory requirements should be eliminated; any remaining requirements should apply equally to all providers on a technology neutral basis. “
NOTE: TDM refers to services that are NOT Internet protocol (IP) currently in place.
And in their FCC petition AT&T states that the trials should be ‘free’ of legacy regulations’ — meaning free of basic service obligations, like having to offer basic service or quality of service reporting.
“As AT&T envisions these trial runs, the Commission would also keep IP services free of all legacy regulations so that the trial may proceed without the distorting and investment chilling effects of such regulations.”
And of course, AT&T doesn’t want to bother with record-keeping or accounting, the AT&T mantra in all of these documents.
AT&T FCC petition writes:
“The above discussion is not intended as a comprehensive list of the outdated regulations that create disincentives for broader investment... Other residual obligations may have the same effects by requiring carriers to maintain TDM functionality in their networks including requirements related to ... record-keeping, accounting, guidebooks, payphones, and data networks. “
- Removing “Carrier of Last Resort” (COLR)
- Removing Customer Protections
In every filing, AT&T makes clear that they don’t want to offer services to every customer, commonly known as “carrier of last resort,” even though they control the state’s utility networks.
According to the NRRI report:
“Most importantly, by the end of 2012, legislation in ten states had withdrawn or limited the requirement that the incumbent carriers serve as carriers of last resort in their service territories. The legislation pending in 2013 continues the process of moving toward a deregulated, market-driven telecommunications ecosystem.”
AT&T intends to finish the job by having the federal agencies remove all remaining obligations.
AT&T wrote in 2009:
“Incumbent LECs (local exchange companies) historically provided service pursuant to an exclusive franchise that was coupled with extensive “carrier of last resort” (“COLR”) and other legacy requirements that imposed an obligation to serve all customers, at regulated rates, within a particular area. The exclusive franchise portion of that regulatory compact has long since vanished, but ILECs in many cases remain obliged to provide basic voice service throughout their service areas, including in rural and high-cost areas, often at rates significantly below cost.”
In fact, according to AT&T, without the removal of all obligations on phone service the ‘transition’ to broadband could be blocked:
“Equally important, to the extent these requirements require the continued availability of POTS service, they may serve as a legal obstacle to the retirement of the PSTN and, thus, as an impediment to the transition to broadband.”
AT&T’s 2012 petition wanted to once and for all kill any obligations.
“Federal and state service-obligation rules. State public utility commissions have transitionally imposed service obligations that require ILEC’s to provide on demand telecommunication services to all customers in a given geographic area, often at regulated rates regardless of how many actually subscribe to those services. Legacy federal ETC (eligible telecommunications companies) rules create similar obligations.”
“These legacy obligations therefore deter broadband investments.”
But AT&T wouldn’t want to harm any customer, so they’ll at least warn customers that they are about to terminate their service - which they could have had for decades.
“In particular, the Commission would permit service providers to notify customers that such service provider will no longer provider them legacy services once the legacy TDM network is retired. Under this approach, customers would of course be given sufficient opportunity to establish alternative arrangements.”
- Let the FCC Remove Competition
AT&T and the telcos keep talking about free markets and competition, when, in fact, one of the goals of this transition is to close down the rights of all competitors currently using the networks. In fact, AT&T’s plan has been to get the government to protect their business by writing laws to block competitors.
In August, 2012, AT&T wrote that the FCC should eliminate any requirements or obligations on AT&T and the local phone companies and remove the rights of competitors to rent the networks at wholesale rates.
“Reform wholesale obligations under section 251/271 to eliminate unbundling, resale, collocation and other requirements that could require ILECs (local phone companies) to maintain TDM networks and services. Following the transition, unbundling should apply, if at all, only to bare copper loop facilities (requesting carriers should supply their own electronics).”
AT&T’s petition continues, explaining that the CLEC’s, (Competitive Local Exchange Companies) believe they have rights — but that’s a mirage.
“Regulatory status of IP-enabled Services. As AT&T previously has explained, IP-enabled services including all VOIP services, are appropriately classified as interstate information services over which the Commission has exclusive jurisdiction. “But some CLECs and state regulatory continue to attempt to assert state jurisdictions over such services, although none exists. Completing action in the IP enabled services proceeding would put an end to such claims and drive additional investments by providers. “
The petition continues — once we transition to VOIP all regulations are void — including ‘carriers’ or customers rights to demand any services they have or had for decades.
“To the extent VOIP replaces legacy circuit switched telephone in the trail wire centers, the Commission would preclude carriers (including carrier customers) from demanding services or interconnection to TDM format in those wire centers. Hence, as VoIP replaces legacy circuit switched telephony, no carrier would be required to provide TDM-based dedicated transmission services Carriers would have no right to demand TDM interconnection or service...”
What are we to make of all this? AT&T’s own words clearly show that this plot is deep and disturbing as it a massive state and federal campaign to shut down America’s utilities. And it’s clear that neither the FCC nor the state commissions are capable of protecting the public interest.
CODA: In 2017, the FCC is pushing to have the FCC, not the states, take control and allow the companies to ‘shut off the copper’ at will. It is also in the process of erasing the telco accounting rules, and it is doing exactly what AT&T (and ALEC) have wanted. In short, this is the corporate takeover of the FCC. This is just one more reason to take the FCC to court— now.
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