Moving telephony to the Internet via technologies such as Voice-Over-Internet
Protocol ["VOIP"] was supposed to herald a radical new era in telecommunications,
enabling anyone capable of delivering data over the Internet to offer
telephone services. It is, of course, much easier to announce a 'new
era' than to actually produce one. Setting up a telecommunications network
capable of servicing even a small segment of the market is a difficult
undertaking, more akin to a marathon than a sprint. And like all marathons,
the "last mile" is the most difficult.
For new carriers offering local telephone service, the "last mile" refers
to the wires, switches, etc. needed to deliver a call from where the
company's data servers are collocated, to the customer's home or office.
Although the 1996 Telecommunications Act
[hereafter "The Act"] removed many legal obstacles at the Federal and
State levels that had previously constrained new entrants into the market,
a new carrier desirous of building out its network directly to the customer
still must wade through red-tape at the municipal level. Municipalities
retain authority over streets, and federal courts have agreed that they
may establish regulations related to the use of public rights-of-way,
such access to poles, construction methods, etc.
New
carriers can, however, utilize components that the major phone companies
already have in place. While this can reduce time-to-market from a technical
standpoint, it does not necessarily reduce the possibility of cumbersome
litigation. Under § 251 of The Act, the FCC has the authority to require
existing carriers to allow access to any telephony elements it deems
"necessary", and that would "impair" the ability of a new carrier to
offer services if said access was denied.
Yet, even though provisions such as these were created specifically
to clear a path for new carriers, their legal road is still bumpy at
best. Instead of specific rules dictating exactly what incumbents must
allow competitors access to, the Local Competition Provisions of The Act contain many vague standards -- allowing the FCC
leeway to assign its own interpretations. The Supreme Court criticized
the ambiguity inherent in these provisions, then forced the FCC, which
had construed standards governing interconnection and other issues broadly
[resulting in a degree of carte blanche to upstart competitors],
to reevaluate many of these definitions.
The FCC attempted to do so, but these
interpretations were quickly contested as well, and are currently mired
in litigation. One commentator opined that the FCC "missed the point"
of what types of rules would help foster an environment conducive to
competition, and that their strategies have "backfired," resulting in
a morass of uncertainty that will only impede new entrants.
What
all this means is simply that new carriers, whether bridging the last
mile by building out their network directly to the customer, or by requesting
interconnection with existing carriers who can deliver the call, should
expect numerous legal tussles that could drag on for some time, and
are prudent to figure this into the costs of getting off the ground.
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