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Title II's impact on ISP investment; new Carrier Ethernet standards

In telecom news, a study looked at the financial impact Title II regulation could have on broadband investment, while the MEF announced new Carrier Ethernet standards for interconnection points.

This week in telecom news, a study found that Internet service providers (ISPs) would cut back on capital investment if broadband Internet is reclassified under Title II of the Telecommunications Act. Meanwhile, the MEF announced its plans to define Carrier Ethernet standards for interconnection points.

The Federal Communications Commission (FCC) is examining policies that will help facilitate the TDM-to-IP transition through the sale or auction of retired copper infrastructure. The FCC is also investigating consumer complaints that carriers are letting copper infrastructure deteriorate to force customers onto new infrastructure.

ISP investment would decline with Title II regulation

Internet service providers are likely to invest significantly less money in capital investments if wireline data services are reclassified under Title II regulation, according to a study from analyst firm Sonecon, a securities and risk management company.

The study found that under current regulation, ISPs are expected to invest $218.8 billion from 2015 to 2019. If services are reclassified under Title II of the Telecommunications Act, however, ISPs investments over the same time period are expected to drop to $173.4 billion.

Earlier this month, President Barack Obama urged the FCC to reclassify broadband Internet as a public utility under Title II.

Sonecon suggested that the impact on investment would be greater if wireless data services are also reclassified under Title II, citing a direct negative impact on wireless infrastructure buildout and the relationship between wireless and wireless investments.

USTelecom President Walter McCormick said reclassification under Title II "would be contrary to the national interest in broadband investment and deployment."

The study results were based on data from five companies with some Title II and lightly regulated wireline networks: Alaska Communications, AT&T, Cincinnati Bell, TDS and Verizon. Data from USTelecom was also included in the study.

New Carrier Ethernet standards to address interconnections

The MEF announced last week it plans to define standards for Carrier Ethernet interconnect points. At its GEN14 Carrier Ethernet conference in Washington, D.C., the MEF said the standards will include all aspects of end-to-end Ethernet connection points between operators, including location requirements, External Network-Network Interface (ENNI), wholesale service alignment and business process alignment. When completed, the standards will help extend a service provider's reach when customers need to reach an off-network location. As a result, network operators will be able to deliver services in a consistent manner regardless of end-user location, and service providers that deliver another provider's Carrier Ethernet service, can be compensated for handling additional traffic.

Ethernet interconnect points will replace time-division multiplexing (TDM) meet points that have been deployed since the introduction of T1 connections 40 years ago. The lack of Carrier Ethernet interconnection standards has been a major hindrance of the global expansion of Carrier Ethernet. In the past two years, enterprise customers have shown growing interest in switching from traditional TDM/SONET connections to packet-based Ethernet connections for their networks, according to Infonetics Research principal Michael Howard.

Infonetics Research expects steady carrier Ethernet services growth from $36 billion in 2013 to $56 billion in 2017 as more enterprises choose to focus on opex rather than capex in a growing services-oriented market. ­-- Kate Gerwig

FCC evaluates TDM-to-IP transition

As telephone service providers begin to retire copper infrastructure in the TDM-to-IP transition, the FCC is considering policies to facilitate the sale or auction of retired copper.

The FCC is looking at policies that define copper retirement and ensure that new IP services meet consumers' needs before retiring legacy services. The FCC is also examining policies that would promote competition during the TDM-to-IP transition by requiring carriers to replace legacy wholesale services with equivalent services at comparable rates, according to Telecompetitor.

The FCC also plans to examine whether carriers are allowing copper infrastructure to deteriorate to speed up the transition to IP infrastructure. Consumers have complained that carriers like Verizon and AT&T have been letting copper infrastructure rot to force customers into using IP-based voice services. The FCC ruled that carriers must ask for permission before discontinuing legacy services.

"This ensures that there will be a public process to evaluate a proposed discontinuance before a choice is removed from the market, regardless of how the carrier has written its tariff," the FCC said.

Next Steps

How could Title II affect net neutrality?

Dig Deeper on Carrier Ethernet

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