PSC Tells FCC it Wants to Share Jurisdiction over Future Network, but Does Little Now

As part of its “National Broadband Plan” proceeding, the FCC solicited comments on what the policy framework should be as we transition from a switched-based to an Internet Protocol (“IP”)-based communications network. In its January 27, 2010 comments, the New York State Public Service Commission (“PSC”) emphasized the role the states have “in protecting consumers in the provision of local telecommunications services.”

The New York PSC raised several points which, correctly, outline its position that the current dual regulatory structure it shares with the FCC should continue:

“What is important to understand and contrary to the general tone of the industry comments, is that the states have a role, in partnership with the FCC, in overseeing the transition of the network as it evolves from a PSTN [Public Switched Telephone Network] to an IP network. That partnership will provide a viable, robust, and reliable telecommunications network which will provide for the safety and welfare of the citizenry in addition to supporting competition in the industry.”

“There is merit in the FCC setting certain national policy that provides for uniformity, reliability, viability, and accessibility of networks. On the other hand, states are in a better position to provide oversight, remediate problems, and enforce regulations at the local level. States will remain interested in issues such as carrier of last resort obligations, carrier interconnection, intercarrier compensation, network reliability, and interoperability, just to name a few.”

“In order to ensure that networks remain robust and reliable, the states need tools such as service quality metrics and outage reporting records.”

“[T]he FCC and the states will both have roles in insuring that consumers are protected, that networks remain robust and reliable, and that competition and customer choice flourish – all three in an evolving regulatory environment where regulation will be limited to those areas that require it.”

Yes, state utility commissions are in a unique position to understand the local telecommunications markets in their respective states, but the transition to an IP network will likely eliminate the distinction between “local” and “non-local.” With the current offerings by Voice over Internet Protocol (“VoIP”) providers, such as the voice services offered by the cable companies, and wireless carriers, end user customers pay for a bucket of minutes at a set price. There is no “distance” associated with these minutes and the concept of local, regional, and long distance (and intraexchange, interexchange, and LATA-wide, for that matter) may eventually become a relic of the time in which they were created. The question is, more precisely, if all customers subscribe to some future modified form of “telecommunications service,” which may include data with voice thrown in as an adjunct offering, what role would a state regulatory commission play?

Keep in mind that the PSTN and IP networks are actually a single network, with data and voice traffic sharing the same wires and connections. That said, even using the current intrastate/interstate model, turf wars have arisen over the years between the respective federal/state jurisdictions. What will the jurisdictional distinctions be for the future network? Does a new paradigm need to be invented to continue the necessary concept of dual jurisdiction?

Absolutely not.

Communications will continue to occur between people across the street from each other (intrastate), from Montauk to Buffalo (intrastate), and from New York City to San Francisco (interstate). The concept of local and regional may fall by the wayside, but state boundaries are not anticipated to change. "Safe harbors," or rebuttable presumptions of what portion of a providers services and revenues are intrastate (under state jurisdiction) and what is interstate, (under FCC jurisdiction) should continue.

Which brings us back to the PSC’s Comments. They emphasize a salutary desire to continue to protect consumers, to ensure reliable networks, and promote policies which support competitive choice (on both the wholesale and retail levels). However, it is within the PSC’s jurisdiction today to protect wireless consumers but it has not yet acted. It can regulate wireless terms and conditions after holding a hearing to determine whether such a step is necessary, but it has not called for such a hearing. New York can also bring VoIP providers into the fold by, for example, including them in state funds which promote universal service, but has not. VoIP and wireless have combined to take about half of the state’s access lines, leaving the PSC overseeing protection of consumers for only 50% of the state’s intrastate telephone customers. The PSC needs to apply reasonable consumer protections and network reliability standards on all telecommunications providers in New York State or it will be completely left in the cold whenever a “new” network emerges.

Trying to ensure a toe-hold in the future IP network is essential for the PSC, but leveling the playing field and regulating similar services today in a similar fashion must be done in order for the PSC to have a say in the matter once the migration is complete. Changes in the technology used for communications do not lessen the need to protect consumers, and providers should not be able to avoid PSC oversight by hollowing out regulated services which use older technologies and putting customers into new categories of unprotected service.

Lou Manuta