FCC Copper Retirement Proposal Raises Industry Concerns

In the midst of the spectrum-heavy Federal Communications Commission agenda for Thursday is a proposal for how the agency will regulate the transition from legacy networks to new technologies that some industry groups worry could deter broadband deployment.

The technology transition proposals described by Chairman Tom Wheeler in July largely found middle ground between industry concerns on regulation and public interest groups’ concerns about competition and consumer protection as phone and Internet service providers update their copper networks. But one proposal that said the agency would define network retirement so as to "prevent retirement of networks by neglect" raised a red flag for industry associations and was followed by several filings from Verizon decrying the myth of so-called de facto retirement.

“Our concern is that our members not be double-taxed because the investment case for deploying fiber is relatively thin at this point, especially in the early stages,” said Heather Burnett Gold, president and CEO of the Fiber to the Home Council North America. “If we’re already making the commitment to deploy, we don’t need to be bound to maintain the copper.”

In recent filings with the FCC and on its public policy blog, Verizon said those rules could force companies to invest in copper networks and divert money from deploying fiber networks.

The FCC has said that defining de facto retirement will require carriers that don’t intend to further invest in their copper facilities to give notice to consumers and carriers that rely on that infrastructure before it becomes unusable.

In a call with reporters on Tuesday, Karen Reidy, vice president of regulatory affairs for Comptel, the Competitive Communication Association, said the proposal will push carriers toward actually retiring and replacing their copper networks.

“The commission is saying maintain the copper or retire the copper, but you can’t have it both ways,” Reidy said.

The issue is not always so simple. Often the transition to a new network is not part of a five-year plan but comes in specific instances where the equipment has become obsolete, said Mark Uncapher, director of government affairs for the Telecommunications Industry Association.

Some of the equipment is more than 40 years old and is no longer manufactured, which has prompted some companies to “cannibalize” spare parts or try to buy through eBay to repair older networks, Uncapher said.

At times, “it’s necessary to make the transition because it’s just cheaper to do that than go out and try to replace it,” Uncapher said. “There needs to be a recognition of that reality.”

The TIA has been concerned that the process not be “overly cumbersome,” Uncapher said. The summary from Wheeler about the de facto retirement proposal appears to assume network abandonment is happening independent of whether the equipment can actually be repaired, he said.

“It really creates an unfortunate presumption against the carrier about when equipment breaks down that it is a de facto retirement, but the reality is frequently the equipment is so old and so obsolete that it is difficult to maintain,” Uncapher said.

Fiber to the Home Council representatives met with commission staff to discuss the issue, and Gold said the discussions were productive. She said she received assurances that the de facto retirement rule is intended to force fiber deployment, although she still has concerns.

“I still have some question marks around the de facto retirement issue only because I haven’t seen the language, but I think people were very cognizant that they didn’t want to do anything that would impede the rollout of fiber to the home,” Gold said.

Initially, the organization had concerns about proposals related to customer notifications and backup battery power, but the rules described by Wheeler in July are a “more balanced approach,” Gold said.

The battery proposal would require providers to inform customers that unlike copper-wire phone lines, the more modern substitutes need backup power to work during an electrical outage. The rule would require providers to make an eight-hour backup power source available for sale to customers, increasing to a 24-hour option in three years. It is up to the customer whether to buy the backup.

Another proposal would would require incumbent providers that stop offering their legacy services to offer replacement services to the competitive providers at similar rates. Windstream Corp. a phone and Internet service provider, has advocated for such a proposal to prevent the transition from causing big changes in price and terms and conditions for the wholesale services that competitors purchase, said John Nakahata, partner and chair of the communications practice at Harris Wiltshire & Grannis, who has represented Windstream.

The proposal is not a general regulation on the price of the more modern ethernet services but would only apply in situations where the legacy service is discontinued, Nakahata said.

“Even though the incumbents at this point aren’t putting forward discontinuance applications, having this rule in place is helpful because it helps everybody understand what the rules will be at that time and to be able to do their contracting now accordingly,” Nakahata said.

--Editing by Jeremy Barker and Brian Baresch.