Hepting et al v. AT&T Corp. et al

Filing 294

EXHIBITS A-K, Q-T, and V-Y to Declaration of J. Scott Marcus in Support of Plaintiffs' Motion for Preliminary Injunction filed byGregory Hicks, Erik Knutzen, Tash Hepting, Carolyn Jewel. (Attachments: # 1 Exhibit Exhibits Q-R# 2 Exhibit Exhibit S, Part 1# 3 Exhibit Exhibit S, Part 2# 4 Exhibit Exhibit S, Part 3# 5 Exhibit Exhibits T, V-Y)(Cohn, Cindy) (Filed on 7/5/2006)

Exhibit Q

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554

RECEIVED
In the Mte of atr
Petition for D c a a o y Ruling that AT&T's elrtr PhonetePhone IP Telephony SeMces Are Exempt fiom Access Charges

1 1 1 1 1

PETITION FOR DECLARATORY RULING TEAT ATBT'S PHONE-TO-PHONE IP TELEPHONY SERVICES ARE EXEMPT FROM ACCESS CKARGES

David W. Carpenter Sidlcy Austin Brown & Wood Bank One Plaza 10 S.D h m Chicago, Illinois 60603
[phone]

David L. Lawson Julie M. Zampa Sidley Austin Brown & Wood LLP I501 K Street, N. W. Washingto& D.C. 20005
(202) 7368000

Lawrence J. Lafaro Judy Sello ATBT Cop. Room 3A229 900 Route 202/206 North Bedminster, New Jerscy 07921
[phone]

Mark C. Romblum

October 18,2002 -

1

TABLE OF CONTEXTS

PAGE
LYTRODUCTION AND SUMXIARY .....
B I C KG ROUND
.........................................
.......

I
0

..........................................................

I.
-.
3

ISP Exemption

.............................................

...................................

7
X

The Intetnet And 1'01P Telephony

...............................................................

3.
4.
3.

Tlic 1998 Cnlvcrsal Scrvice Report ..............................................................

I2
15

The U S Wrsl Eclilion And The Subsequcnt Developments

............

ATOtT's VOIP Scrviccs ................................................................................. The Conlrovcrsy O \ c r Intcrstatc Acccss Charycs .........................................
Slalc Decisions and Contl-okcrsics.................................................................
.......................................................................................................................

I7

h.

I9
2I 22

7.
..RC.UXIEUT
1.

BECAUSE ATKrT'S PHONE-TO-PIHONE IP AND OTHER SERVICES ARE PROVIDED OVER THE INTERNET. THEY MUST BE EXEMPT FROM REQUIREMENTS THAT THEY PURCHASE ACCESS SERVICES THAT A R E ABOVE-COST A K D IKEFFICIENT ...................................................................................... THE ILECS' ACCESS CHARGE ASSESSMENTS VIOLATE THE C'OMMISSION'S POLICY OF EXEMPTING PHONE-TO-PHONE IP TELEPHONY SERVICES FROM ACCESS CHARGES PENDING FUTURE COMMISSION ACTION .............................................................

24

II.

25
33

CONCLUSION ....................................................................................................................

I

Before the

FEDERAL C`OMMUNICATIOYS COMhlISSlON
Washington, D C. 20554

111

the Marter of

Petition for Declaratory Ruling Ihat AT&T's Phone-to-Phone IP Tclcphony Services Are r k t 1 1 p t I ' h l A c c Charges ~

) )

)

1

PETITION FOR DECLAR.4TORY RULING THAT AT&T`S PHONE-TO-PHONE ir TELEPHONY SERVICES A R E EXEMPT FROM ACCESS C H ~ R G E S
AF&T Corp. ( ` . A T & T ' ) respectfully petitions the Commission tor a dcclaratory
ntling that tlic "plionc-to-phone" IP tclcphony services that A T & T offers over the Internet arc c-tcmpt ti.oni the access charges irpplicablc to circuit switched iiitcrexchangc calls and arc
Iawlitlly bcins provided over end tticr local services. A T & T sccks this relief to t-c'~oIvc actual

controvcrsicb

\\it11

LECs over the applicability of interstate acccss chargcs to AT&[ scrvices and

to provide guidance to states who follow the federal rulc in asscssing intrastate access charges.
INTRODUCTION AND SUMMARY
A T & T seeks a dcclaratory nilin2 that iiicumbcnt local cxcliangc cat-1-icrs

("ILEC`s") :ire tinlawfully imposins

~CCCSS

charges on the i i ~ c c n "phonc-~o-plic~t~e" t Intcruet

Protocol ("IP") telephony scrvicc that A T & T and otlicrs arc providing over thc Intcrnct.

;\T&T`s provision ofthew services rcqttircd i t to makc large invcstmcnts i n "common" Intcrnct
1xickbc)iic fiicilitics that carry all types of Internet traffic, and A T & T ' s investtnents a n d vcry limited initial \`oicc offerings arc csscntial prcconditiona to future ofrerings of the integrated
\ ` O I C ~ .d a t a ,

a n d multimedia serviccs Lhat IP allows. A T & T submits that [hc [LECs' cfforrs to

ilnposc access charges on this plione-to-phone Intcnict traffic violates: ( I ) the congrcss~onal
mand;itc to "prcscrvc tlie vibrant and competiti\;c free market that presently exists for ilic

Internct" and ( 2 ) tlic Commission's established policy ot`cxcmpting all voice over lnlcrnct Protocol ("VOIP") services from access charges pending the future adoption of nondiscriminatory regulations on this subject. Foremost. the Commission has long rccognizcd t h a t it would subvert tlic congressional policy of tosrcring the Internet if nascent and emerging Internet services were
rcqttircd
IO pay

Ihc access charges that are currently applicable to circuit switched iiitcrcxcliangc

services. I t I u s found that access charge rate structures are "above cost" and "incfticicnt" and
that it would distort

and disrupt ltitcrnct scrviccs and investments that arc "still c\olving" if thc

w r \ ices were subject to these iiiilaled charges. rather than to rates that apply t o cnd user or other
local scr\ ices and that can fully c-unipcns~te LECs for all legitiniatc costs. Thcsc arc the rcasons
that thi` C'otiiniission i n s cxeniptcd all enhanced and informalion service pro\ idcrs (collectively

r c h r e d to as "ISPs") I'rom the rcqtiirciiicnt that they pay access charges and has pel-niittcd them
to subscribe instead to end user local scrviccs.

For the same reasons, the Commission has treated a11 tlic nascent and emerging
V O I P telephone services as enjoying the ISP cxcmption until such t i m e as the industry matures,
; I

full record is compiled, and thc Commission determines wlicthcr some form of;~cccss charges

can Ipropcrly. feasibly, and nundiscriniin~torilybe applied to some forms o f t l i e s e scr\,iccs. In particular. the Commission lias repeatedly refused the ILECs' entreaties that thc Commission
hold that phone-to-phone or other VOIP services arc required to order originating a n d

lcrnlinating acccss services and lo pay tlie sanie access charges applicable to ~ntcrcxchangc calls.

circuil

switcllcd

2

Thc first such action was the Commission's 1998 Universoi Semiie k q A J V f to
Congress. Thc Coinmission there tentatively concludcd that certain configurations 01` L`OIP scr\ iccs (coniputcr-to-computer and computer-to-phoiic) arc information scr\'iccb ;Ind that othcr configurations (phone-to-phone) arc tclccominutiicatioiis services, regardless o f wlictlier the scrviccs arc provided over the coininon Internet (like AT&T's service) or over iiitci-czciiangc nctworks t h a t use Internet Protocol. But tlie Commission stated that the nascent services would
Iiavc to mahirc and a complete record would have to be compiled before i t could determine if

thcsc tcntatiw classifications were rational and sustainable, and the Commissioii dctcrred tlicsc iwics
IO

lulurc proceedings.

Most fundmicntall)~. Commission stated that even i f i t t1icrc;iRcr futind that a11 [he
phone-to-phone IP telephony services arc telecommunications services that placed tlie "samc

burdens`' 011 tlie local cxchangc ;is do circuit switched intcrcxchange calls. it would 110t follow
that the IP scr\,ices would be subject to tlie
.satw

access chargcs that arc applicable to circuit

sivltclicd long distance services. Quite the contrary, the Commission stated only that i t " m y "
then "find it rcasonahle" to requirc "certain

fornis" of "phone-to-phone IP telephony services'' to

pay ".~iw7i/nr access chargcs" and that the adoption of such a requirement would iraisc "difficult a n d contested issues:" '..p., whether there was a n "adequate" and technologically sustainable hiisis I`or "distinction" between plionc-to-phone and othcr VOIP services and whcthcI- the dctcrniinalions rcquircd to x s c s s pcr ininulc charges on a11 phone-to-phonc sei-vices could rcliJbly bc madc. Three individual coinmissioners contcmporancously made statements that eitlier opposed, or expressed gravc reservatioii about, subjecting VOIP and othcr innovative

IP services to tliesc and othcr regillations applicnblc lo circuit switched long distance sewice.

3

The fdlowing year the C`ominission thus rcfused even to entertain U S R:cst`s
:\pril I909 pctitlon tor a clcclaratoq ruliny that access cliargcs apply to phone-to-photic IP
tclcphony scrvicch that arc n o t ofrcrcd over the Internet, but use I P in tlic intcrnal inrcrcxchangc

nct\vorks. U S W c s t had contended that these latter services arc subject to access charges as a iiiattcr o f I J W because they are "tcleconimunications scrviccs." and not information w r \ ices. But
tliis

was tlic same legal then17 that the Coinmission had rejected i n the Ci7iiewol Se~i,it.e RP/JOU

;ind the Coinniission did not even issue a Public Notice or otherwise rcquesl coiiinicnl on thc
I! S U'cst petition. In the ensuing years. the Commission has not clsewhere addi-csscd the

qydiciibility

~ ~ C C cliiirges ~SS

to phone-lo-phone I P tclcphony scrviccs.

By dcclininy to rcquirc providers o f plionc-to-plionc T telephony scwiccs to P

ordcr inllated acccss service. thc Commission allowcd thcm to tisc cnd user local services that
arc Ipriccd closcr to tlicir economic cost. This has bccn tlie unifomi Ipractice ol'tlic many firins
t h a t arc providing nascent
M

h o l e s a l e and retail phone-to-phone IP tclcpliony services - wliicli

collcctivcly represent a tiny fraction ( l%5%) o f iiitci-cxchange calling. for example. w h i l e

ATKrT has clcctcd to use acccss scnjices to originate irs calls, AT&T has terminated its plionctv-phone IP tclcphony services ovcr tlie sainc local lacilitics and services that terminale its

1st`

tuftic: principally. privalz lines obtained tkom C L K s and ILECs. uilh tlic CI-F2C7stci.minating
c;ills on reciprocal compensation t r u n k s i f thc called party is a n TLEC ciistoiiicr.

IHowcvcr.
lplionc-io-phone

31.1~1 failing

to obtain Commission rulings that providers o f

Ir rcleplion!f

services arc required to iisc access services, incunibcnt LECs arc

inow attcniptilig to cn`ect end runs around tlic Commission`s policy by engaging in uelf-liclp.
Bccause thcy
~ I I K taklng

the position ihat Ihc business lilies and other local facllirics arc ;Ivailablc

only tor "computer-to-phone" and "conipurer-to-computer" tclepliony services. ccrtaiil I LECs

4

arc: ( I) rcfiisiiig properly to provision local burincss lilies to terminate phonc-to-phone
I P telephony services. (2) taking down local busincss lincs that they discover arc bcing used to

lci-iiiinate biicli calls, or (3) using Calling Party N u m b e r identifiers to assess intctstaic (;lnd intr;islatc) ;icccss charges on phone-to-phone IP telephony calls that tcmiinate over rcciprocal conipcnsatioii trunks.

Tlic unilateral nclions of ILECs have thus given rise to aclual contro\ci.sics ovcr
the applicabilily 0 1 interstate access charges to AT&T's phone-to-phone 1P telephony services.
Plninly. only
;I

ruling from this Cummission can resol\,c tlicsc conlrovcrsies. Furthcr. a fcdcIal

dccijion on lliis isstie is iniportant tor Ihc additional rex011 that i t will provide lcaclei.ship nnd

uiiicl;iiicc .n\:crning

to tlic states. Su1c commissions liavc recognized the importance o t u n i f o i - m rules

cmerging Intcrnct and other s c n i c c s a n d have chosen to follow tllc tcdcral rule in

making [heir determinations of-the applicability

o r intrastatc access charges to any

itirisdictionnlly intrastate bcrviccs. But contrary to decisions of other state conimissions. the

NY PSC` I i a ~ rcccnlly construcd tlic Commission's dccisions to require acccss charges
awxsli1cIiis 011tlicsc scrviccs. ,A declaratory ruling will allow states to acliicvc uniIbrmity. For reasons set forth in inorc dctail below. thc C o m n i i s s i o ~ ~ sllould inow hold that
,AT&T's plionc-to-phone IP tclcphvny services are cscmpt lion1 access charges applicable to cII'ciut s\vitchcd intcrcxchaiigc calls. This is so for two scparatc reasons.

Firsi. whatcvcr tlic case with the other "forms" of pliolic-to-phone IP telephony

scrv~ccs, AT&T services at issue licrc arc provided ovcr thc lntcrnel and required large the
invcstmcnls to upgrade Intcrnct backhonc facilities and to enable tlicni to carry high quality Loice as \vel1 as data. The congressional mandate o f "prcscrviiig" a "competlti\c frcc market
k11-the Intcrnct" dictates that providers oflnternct telephony services be pcnnancntly free to
,,

5

d x a i n local x r v i c c s to vrtginatc. or terminate lntcnier traffic and be exempt from ri'qt~tremcnrs
tlial he!, oi.dcr and

..

pay Tor access ser\;iccs provided at rates that arc above-cob! and ~ n c f t i c ~ c n t .
011

A n y other rule would cCfccti\,ely s a n c t i ~ i taxcs i

the Internet.

Second. cvcn if AT&T's services were provided over ord~nary ;ne pri\
iiitci-cxchan~c t'ac~liticscising

IP. tlic incumbcnts' sclf-help iiicasurcs arc InconsistcnI \vlth tlic
311

( ~ ' ~ i i i i t i i i s s i ~ 'i wi a~ t and x c " policy ofexcmpting t 'i

VOlP services from above-cost r~cccss

cli;irgcs i i i i t i l t h e niarket had iiiaturcd and the Cornniission could coniprcltcnsivelq address the
proper r c f ~ i l a t o r yireattncnt o f t l i c i i i . This policy was sound
-

and remains so. Prcmat~trclyto
31 1d

SlibJCct new tcchii<)logicsto iiiel'licicnt clinrges could block their developtncnt
diict-iiiiiiiatioii

risk iinIa\.r~fttl

among scr\ I C ? ) (conipLitcr-to-computer, coniputcr-to-phone. and phone-to-phonc)

t h a t iiiakc idciitical uscs oi'locnl cxchangc lor identical purposes. The Coninitssion should ratify

its ~ / c , , / ~ K / :iccc\s charge cxcinpt ion and foniially impose a moratorium mi x n y ;tcccs\ charge o

ment on L ' O I P scrviccs pending ~ h Commission's adoption ofnilcs hat dcrcrmine the c

appropi-ialc chargcs and that allov, llieiii prospcctively to bc nondiscriminatorily applied t o 2111
similaIly siluated pro\,idcrs.

BJICKGROUND
To 1J13CC tltc
I S S L I C ~ it1

conrcxt, it will be liclpliil

to

describe: ( I ) thc I S P
f,'!/jwxcJ/

c.;c.inptioii. ( 1 )rlic Inlcrnct and Intci~~ict Telephony. ( 3 ) the Coinmission's I99X
.Cc~~-i~icc.~ ( J v / the c o i i t c ~ i i p ~ r a ~ i c ~ t ~ ~ o f Rc and stat~ineiits

individual Commissioncrs. ( 4 ) Lhc April,
11131 ATGLT

1')9c) U S WCSL Petition For a Dcclora~otyRuling, ( 5 ) thc I ' tclcphony services F

and

competing provtdcrs no\v otter, ~ i i d 6 ) tlic actions o t t h c incumbent LECs that give rise to tlic (
Iprcscnr
iicti~iilcontroversy.

6

I . ISP ExcniDtion. Under the Coniiiiunications Act of 1034. tlic C'ommisslon
could have rcqLiircd all interstate
L I S C ~ Sof

local exchange facilities to pay the s a m e ~\\,itclicd pci-

iiiiiiute ncccss chargcs that appl) t o the circuit s\vitchcd s e n ices ol'intercxchangc carriers. I But
Ihc C'oniniission 1x1s refused to do so. Iiistcnd, it has sivcii providers of enhanced
;ind

infoi-mation scr\.iccs ("ISPs") the oprion ol'acting as end users and subscribing to ll;it-i.atcd business liiic and other local end USCI- services:
1

Tlic ('ommission originally adopted this excniption in I983 as a tciiiporaiy
iitc~stirc Illat would protect the tin;incial viability o f t h e [lien-Hcdgliny ISPs and that ivould
c \ ~ c i i ~ i i a lhc phased nut and eliiiiiiiated.' But tollowing llic enactment oftlic ly

Tclccutntiitinicntioni. Act ot 1996. [he Commission found that tlic cxcniption scrced inorc
I'tindnmcnlal purposcs atid t h a t it should apply permanently. pending tlic adoptioii o l ' i i c w tkderal

iizccss ai-i.angcniciits applicable t o advanced services.
I n Ipirticular. tlic C'oiiimissioii noted that "hnd access ratcs applicd to IS& ovcr
llic past 14 years, tlic pace ofthc dcveloprnciit of the Intemct and ollicr s c r ~ i c c s may
I k c n so mpid."'
IIUL

Iiavc

Tlic Commission iiiadc the exemption pcrninncnl on tlic ground tliiil i t would

pwtect cnicrging and cvoI\ tiis technologius liom thc advcrsc effects of uticcoiioiiiic charges and

\\~ould advancc ~ l i c I996 .!,ct's

policy ofprcscr\itig "'thc vibrant and compcliti\,c t'rcc market

.Sei.e.?.. ,L!TS irud M'ATS ,Lltrdcr Srwclwi, 97 FCC 2d 682, 7 77 ( I 983) (statins t h a t tlic Commission's "ol>.jcctivc" undcr tlic Act is "distributing the costs ofcxchangc ;~cccss i n a fair :ind rcasoiiablc nianiicr among all ~iscrs ~ a c c c s scrvicc. irrespective of their designation as ;I o s carrier UI' private custonicr"). 111 h i s regard, d i e Commission's historical (and rlic IOU6 A c t ' s ) clistinclions bct\vc.cn tcIcCoiiitiititiiCatioiis carriers and enhanced and inlbrmatioii scrvicc providers ("ISPs") dcterniiiics wlicthcr these services are to be regulated. and i t is iri-clevaiit to iltc qucsitoii of what c a d i provider pays for local Cacilities that originate and tcrmirintc lllcir scr\jiccs. S1.e /d. .%e ;<I. 1 c'hf:ee / < i / 0 ) . ~ ? 7 , First Report and Order, 12 FCC Red. 15982. 7 344 ( 1 997)(~~,4cc.cs,v C'/io/peRe/o/-ni").

'

7

tliat

presently Cxists for the lntcrnei a n d other interactive computer services.'"i

111 particular.

it

twicd Ilia1 while i t 11~1s reformed acccss charges, tlic), continue i he "noti-cos! hascd alid o

incffcicnt" and that i t could have detrimental itiforn~ation scri ices that wcrc `.still

illid

disruptive effects to cxtcnd thi: cliarfcs

LO

The Commission also rcjcctcd claiiiitr

illat ilic

tioixisscssiiient of ahove-cost acccss charges resulted in mdcrconipcnsation or incutnbetit LEC`s.
and noted that local service chargcs could fully compensate LECs for the legitimate ccniiomic

costs Ihcy incur in providing their tjcilities.' Finally. the Commission stated that " i t
tliai

IS

iiot clear

ISPs tisc the public switched network in a manner analogous to IXC\".' and thc Coiniiiission

itistthitcd a procccdinf to considcr "iicw approaches" and nltcrnnlivcs to acccss cliargcs fur ISPs`
tisc ofcirctiit-su.itclicd nct\vork technology."

Tlic Court o t Appeals for the Eighth Circuit upheld tlic permanent ISP cxcinptioii
atid rcjcclcd the claim that
ISPS.'"
ii

gcncrically gave risc to unlawful discriiiiinntion bctwccn lXCs a n d

2 . The Internet And VOlP Tclcpltonv. The public lntcrnct is comprised of's
iiunibcr ot`lntcrnct "hackbonc" lacilltics that all liavc wcbsites connectcd t n them iiiicl Ilia! ai-c
iiitcrconnectcd i o oiic anotlicr thi-ough pcering arrangements. AT&T WorldNet and

.I\l'&T Bruadbaiitl arc liitcrncl Scrvicc Providci.s, and ATXrT owns ;tiid operatcs one o t t h c
wurld's Inrscst "coiiimoii" Iiitcrtict backbone Ihcilitics. I t carries tlic traffic ofA-T&T's lSPs and
I r;in

cm I t s p ti h I Ic In!ernet trii ltic zcne ra I1 y .

8

9

Wliilc circuil swilclicd traiisniissioiis dominate interexchangc voice 11onand \$,ill

do

v>for 1111` lbi.csccahlc t`uhirc. invcstnicnts to alIo\v

quality voicc over IP
~

~

mid tlic c x p a n s ~ o n

( i t tlic capacity ol' I P networks tu i a n d l c iiicrcascd voicc usagc

I i a w ti.cnicndous Ipotcntial. By

;dlo\ving \ oicc and data to b e transmitted w c r a single inel\vork. thcsc in\csinicnts call produce
ciioimotis ct`tlcicncics

by allo\ving the intcgratcd provision o l n n array ol'voicc. data and

cii1i;mccd scr\,icc<.

11

But these ftiturc scrviccs will not dcvclop unless pi-ovidcrs tii.st dcvclop tlic

cqxibilit!, to offer high qtialily \,(lice services over Internet backbone facilities or otlicr 11' iict\r,c>iks. and tliat rcquii.cs t h a t tlicrc bc a n initial economic reason t o make the ncccssal-y
i i i \ , c s t i i i c i i l i . ,A

I-LIIS 1 i a iti t i ~ l i o r i i c sC'OIP providers to subscl-ibe to local scrviccs. iratlicr h a i l ~

;ib(ivc-ccisi ;~cccss charges, can provide tliat economic rcason until .\uch time a s cnhanccd \ o i c c

caii be pro\,idcd o w r tlic upyraded IF` I>ciliric.s.

I'

Rc+nnins ill the iiiid I 000's certain fimis began to make invcstmcnts tliilt crcatcd Ilniilcd capacit!' to pro\.ide quality \,oicc scrviccs ovcr the Tntcrncl o r otlicr nctwxks wins
Ilitcrnct

Pwtucol. I I I d d i t i o n to allowing hipher quality voice computer-to-computcr calls, tliesc

wi.viccs c a n a l l c w i c c calls to be lplaccd l'roni coinptitcrs to ordinary touch-Lonc or rotary ~

d~alcd plioncr. tioin phones tu phones, or

tiom phones to coniptitcrs by tiriny the "galeways"

(described ahovc) protocol.

10

Iicrfurin ~ i c c c s s ; ~ y ccIiivci.sions trom \,oicc pl-otocol (TDM) to Intcrnet

For cyaniplc. n plionc-lo-plionc IP ciill \vi11 travel o\'cI- tlw public s\\,itclicd
~ ~ c i \ \ , olok; lucal gateway wlicrc i t rI
I S converted

to Inlcrnct Protocol and then rou~cd v e r tlie o

Ilitcrlict

hackbone to a tcrniinatinp ytc\vily. whcrc it i s convcrtcd back to voice and w i t over

10

local cscliange tliciliiies to tlic called party Tliesc c;illb arc s e n t and rcccived

it1

L o i c c (TDM)

protiicol. and cffcct no iict chanfe iii format. Tliesc scrviccs can he offered throuzli ti\'o-st:igc
diuliii:
aimngcmc'nrs in wliicli tlic callcr dials a local or SO0 number 10 rcacli tlic g a t m t i y ;Ind
iti

t l i c i i dials tlic Iplioiic intimhcr of llic called party. Or thcy ccin be ott'cred through al.reingcmciits
\\

l i i c l i tlic pro\,idei-sLibsci.ibcs to

ai

oi.iginating Feature GI-oup D access sci-\,icc and :iIlo\\,s ilic

\iihscribci- to placc calls h!) dialin$ I plus thc called party's nuiiibcr.
C'oiiiputer-to-pliviic calls can follow precisely tlw saiiic path as plioiic-to-plioiic
~ 3 1 1 s .and

iill coiiipiiter-to-plioiic I P cLi11s iisc the same rermiixiting facilitics as phone-tu-phone

iiills. i;(ii. cyaiiiplc. i l ' a cniiiliiitcr ti\cr lieis a dial-tip cunliguratioii, she. too. wnkild d i l l citlici- an
X O O iiilnibcr
01. ;I

loci11 ntimbcr to rcncli the gale\vay
..

tu

tlic IP network and would thcn dial tlic

~311cd p;il.l!,.s nLiiiibcr.'i Hciwc\ ci.. hccatisc t h e originating PC converts tlic signal\ In IP. no

lptoiocol coiivci.sioii CI~CLIIS in tlic origiiiatiiig pa[cway. and this i s the only ncccssai-y diftkrciicc
lhci\\'ccn n phone-lo-phoiic and comptitcr-to-plionc

IP call. Most pertinently, a11 I'lioiic-to-phone
III.O~OCO~S.

;ind all computer-to-iilioiic ccills iirc tcrminated i n identical ways. i n identical
iilciitical loci11 cscliangc tacilitics. Wlicthcr [lie c a l l
I S translatcd

iind w e r

into I P iii [lie iwiyinatiiig

CoiiipLitci. ( a s iii n comptitcr-to-pliiinc call) o r iii the cirisinatiiig gateway (as i n ; I'honc-lo-plionc I

call). illc I P piickcls

I\

ill bc rmrtcd oi'cr Ilic IP rictwork. converted back to \.oicc signal Iii-otoccil
to tlic callcd party over Ioc;il exchange h c i l i t i c s i n
:I

(TDM) i n tlic !cmiincitiiig $atcway. :itid routed
\.oicc s i y i n l format. The
0111' i c c c s s n i y

distinguisliing ICatui-c of

coiiiliiitcr-to-plioiic cilll i s thal

Ilictr compuicr to tslcplioncs coiinccicd to the public sn,itcIicd nctlvork or from o11c tslcphonc to
:iiiolhcr.
..!&,

But the K q x w / addrcsscd tlic classilication of only tlic

t\\o

types 01' \'(I1 P

contiguratioiis in which tlic L network cffccts no changc i n protocol or format ~ i i d P that cicarly
coiistilt
t t ~~ l c I c c O t i i t i i u i i i ~ i l l i o nllic compiitcr-to-compitlcr ' s:~~

calls (that cntcr and c \ ~ tlic net\\ cirh t

iii lP) iiiid the phone-to-plione cnlls ( t h a t cntcr and exit in \oicc (TDM) protocol).
111

tlic case ol'coiiiputt.r-to-coiiiputcr calls. tlic /?ry~or/ statcd h i t \vlicthcr o r not

~ l t c y "tcIeCOiiitiiuniclltic~iis." llic lSPs whose services cnablc h x c calls to be iiindc do t i o t iii'c
;ippc:ii- t o IIC1irovidci.s o t " ~ c i e c u m t i i i i n i c a ~ i o t iservices." insofar 21s thcy do iiot hold thcnisclvcs s
out :is pi.ci\,idiiis tCIcCoiiimtinicniiuiis and may 1101 c v c i i be aware that tlicir s c n
ICCS

:it-c used tor

tc1ccotiiiiitiiiic;iLtI)iis.

'I)

Tlic /?qxw/ did 1101address tlic ccinipiitcr.-to-c.otiipiitcr c a l l s llial ttsc

c;ip;ibilitics that iirc nctivcl!, marketed or proniotcd by lSPs or othcr scrLicc pi-cividcr~.

By contrast.

iiic C'omniis,ion tcnlativcly rcached the opposilc conclusion lix
ab

" ~ ~ / i o i i c - ~ ~ ) - ~ IP i I cilic p h o n ~ . "\\,hiel1 i t dctined )l o c

scr\,iccs: ( I ) iii \viiicli tlic provider Itvlds

ilscll'out

;I<

prwidiiig tclcpliony. ( 2 )\vIiicIi iisc tlic simc CPE a s ordinary photic c a l k . ( 3 ) w h i c h

c i l l o ~ctisIoiiicrs to c~ill v tclcphonc numbers :issi_:ncd in ;tccordaiicc wit11 the Noi.tli .\mcrican
iitiiiibcriiig plan. aiid (4)\\hie11 Lr:iiisinit intoriii;ilion without chanyc iii coiltent
01'

l?iriiia.- The

-1

C'ommtssivn stated (hat such sct-\~iccsi p p c x to "bear thc chtiractcristics ~ I ' t c I c ~ ~ i i ~ i i i t i t n i c ~ t i o n s :
\CILICCS.

I-Iowcvcr. tlic Coinmission cinphosizcd that thcsc

\\CIK

:ill tctitatIvc

d c ~ c r t i i i i i ~ ~ t i o i i s addrcsscd "ciiicrging services" and that it could not makc "tlclitiitivc tli:tl

13

17

IS

x c c s s lines \ritli c ~ ~ t o i i i reaching AT6LT's local 1P pateway by dialing one plur the called cr~

number. so orizinating access clinrgcs a l e paid on tlicsc calls

(~LISI

as they w i - c p a ~ d tllc on
iiot

Coniicct-U-Save calls that used 800 access). But as i n Connect-N-Saw, AT&T docs

order

~icccss \cr\,iccs lo terminate these calls, but tcmiinates thein over CLEC or ILEC local husincss

liiic!,. with llic CLEC terminating tlic call o w r rcciprocal compensation trunks it'tlic called party

i \ a n ILEC' cListonicr.

Some ot'thc lraffic that ATSrT is routing tlirough this a r r a n ~ e n i c n l consists 01`
cnlianccd >crviccs: prcpaid colliiig c x d services that includes advertising aiiiioiinccmcnts. This

traffic \vas ul'lL-rcdon a non~ariftcd basis prior to t l ~ c August I , 2001 effcclicc datc oftlic
Coiiimis~ion's Drrtrr.!J/iiigO I - ~ C J The balaiicc ofthc traffic that uscs this IP triiiisinission I.
li

;irr;inscment consists ofbotli interstate and intrastate "phone-to-phone IF telcphony service.'
\vitliiii ilic L'/~/I.cww/ c ~ . i wRepoi-t :\ .S'

definition of l l i a t term. Wlierc tcchnically fcaihlc. ATKrT

passes

1111:

Calling Pa$ h'iinibcr (`.CPN") on both types trt tral`fic.
6. The Contrtxersv Over Interstate Access Charqcs. When AT&T had initially

I-ollcd o i i l i l i phone-to-plionc \)01P sersiccs, i t had intended to tcrminatc the calls

1 1 local 1

calling

:irc.ns t)\.cr I o c ~buiiicss Ipi.i\jatc lines ("primary rate inrcrlacc" or "PRI" trunks) t h a l connect thi` l
.`ZT&.r giiteway
10 local

cxclinngcs. IIo\vc\~cr, certain I L K Shavc blocked llicsc at-~-a~igcmcnts

tlirciiigli v a i . i o u ~ forms of s c l l ~ l i c l p .Certain LCCs Ii;i\~crcftiscd properly to pro\:ision the

rcqiicstcd P R I facilities and have b c y n asscssiiig krininating ;icccss charges
arraiigcmcnts that AT&T
liiis

011

the altcrnatlvc

proctircd. Other LECs provisioned the PRI facilitich. but

subsccltrntly rcfuscd to Icmiinatc VOlP traffic over them and havc tlircatcned to disconnect tlic

facilitics uIiIcss AT&T removes its VOIP traffic from them and orders access scr\Jices to trmiinatc it.

For examplc, when AT&T ordcred these local exchange facilitics

ill

Virginia,

Verizon refused to provision the facilitics as AT&T requested. Verizon took the position that although AT&T could order local busincss lines to tcrminate traftic that originntcs on colnputcrs,

AT&T could lint do

$0 on

VOIP traftic thai originates on ordinary tclcphoncs. ATXT rhus

iiistcad ohtaincd private lines from its local service ann and other CLECs, who would dircctly tcrminatc tlic enhanced and hasic voice calls io thcir own local subscribers and would tcmiinatc

calls to Vcrizon's subscribers over rcciprocal compensation trunks. AT&T thus wonld pay
cost-based reciprocal compensation rates to tcrmiiiate calls to Vcriron customers o e r Verizon's
local bMiitclies and loops, rather than paying abovc-cost access charges.

Besinning ar thc end of last year, Verizon bcgan cxarnining thc CPN on calls that Icniiinatc on these rcciprocal compensation trunks and began asscssing LICCCSSchat-ges 011 crrtaiii of thc calls based o n their CPN. It has thus billcd AT&T for interstate access charges on certain

calls and tot intrastate access charges on others, while charging local reciprocal coinpcnsation
cli;irges only on calls with local CPN. The calls on which Verizon has assessed interstatc and intrastatc ;icccss cliarzes include the prepaid calling card calls that arc cnhancrd scrvices as wcll :is phonc-to-phnnc IP tclcphony calls. AT&T has adviscd Vcrizon that it is disputing all these charges. ;ind that AT&T will be entitled to a refund of thc f l amounts in question (plus intercst) ul if and wlicii thc Commission grants the declaratory ruling that

AT&T is here requcsting.

Other iiicunibcnt LECs have thc capacity to examinc the CPN on cslls terminating on reciprocal compcnsation trunks or ollier local facilities, and

AT&T understands that they, too,

I i a w b c p n to cxamine CPN on this traftic.

20

In t h i s regard. Sprint had rcccntly begiiii refusing to terniinate ATGrT's VOIP
calls o\'cr Sprint local business hncs in Tallahassec, Florida. Indccd. rathcr than continuing to

icrniiiiarc these calls. Sprint initially hcpan to route ilic calls to'.dcad air," forcing ATKT to
i.c-i'oute traitic to avoid call disruption and adverse customer impacts. and Sprint had tlil-earencd

io disconiiccr the circuits unless A T & T axreed to move all this traftic o f l o f t h c m and unto

;icccss circuits. Sprint tlicn llircaieried to disconiicct circuits in other arcas as \uclI. \L'licn AT&T

coiiiplaincd that Sprint's actions arc ~ i n l a \ r f ~Sprint rcsunicd tenninatiiiy thc traffic. but opciied ~l.
: I

hillilig disptitc iii which il clninis 1hat ;iccess chargcs apply to this Iraffic.

7 . Slate Decisioiis ;ind Controversies. In proceedings before statc utility
coiiiiiiissions. incumbent LECs ha\ c contended intrastate access chargcs can bc iiiiposcd on

pro\ idcrs of plione-to-photic IP tclephony services that arc jurisdlctionally intrastate. I n
rccogiiition of tlic importancc ot~inifoi-m policies on the application o f access charges to Iiitcrnet
;ind othci. ciiierginf services. statcs iavc generally li~llowcd fcdcral rule appliciiblc to the

inrcrstatc traltic i n dctemiining Whctlier.jLirisdictionnlly iiitrastatc traftic is subject to iiitriislatc
; ~ c c c s scharges. B u t statcs Iiavc rcuchcd different and inconsistent results.
111 proceedines

undcr

$5 251 and 252 u f t h c

Act, two statc PUCs have declined to

iititlioil7c

h c asscssmcnt o l ' a c c c ~ char:cs s

on phone-to-plionc IP tclcphony scwicch. The
:ICCCSS

('olorado PUC has held that incuinbeiit LECs m a y not asscss switched compcnsntion for the use o f their iictcvorks
10

cliatgcs a h

terrninatc phone-to-plioiic IP tckpholly m L i C c s . "

S i i ~ i i l a d y .(he Florida PSC tias iiotcd that this Commission has dcfcrrcd the question of t h ~
:ipplic;~bIlity ofacccss charges to this tl-atfic to future proceedings and decided. o ~ c BcllSouth's r

21

ohicction. that It ivould not address tlic question whether access chargcs should apply to

Iphonc-to-plionc VOIP traitic."

I~lowcwr. another procecding, thc Kcw York Public S c n i c c ( ' ~ ~ i n m l s s i o n in

(NYPSC) held tliiit providers of intrastate phone-to-phone IP telephony scrviccs arc i.ccltiircd to
[pay iiiti.as1;itc acccss charges on ~ ~ 1 1 1 s originate and tcrniinate iii that state." Thc IP that
icli~phony prcn:idcr had tlierc contcnded that lhc assessment of access chargcs w a s contra1.y r o

Icdcral Ipilicics. \Yliilc tlic NYPSC undertook lo follow federal policy. i t reviewctl llic

l. /7ii'c/,.vu/,Xc/.i./c.cR e / ~ o / and tlctci,mincd that iicccss charges should apply to iiili.rlstiitc -/
I~liotic-lo-plioncI ' tclcphony sciwiccs bccause thcy are a "tclccominunication scr\,icc." rather T
tliiln an inl;)rmation o r cnliaiiccd service under fcdcral l a w Ironically, tlic NYPSC' iclicd on tlic
(~-uiniiiiission'sstatement in the C'tiiwr,salScn,ici' Repor/ that i t "'n7nj>find

it rcasconablc"' that IP

tclcphony pro\ iders pay '.similar" access charges in fittiire proceedinxs. The

NY PSC

ignored tile

('oinniission's use of 11icc~udifying word "may." its starcIiiclit that the issucs would bc " d i f f i c u l t

;ind contcstcd."4" and Its st;itciiiciit tliiit ;iccc'ss chargss would only hc imposed in tlic tuturc. By
Contrast. Texas PCIC Chnirniaii Patrick IVood had rcad this language as tlic Commission's holding tlial VOlP scrviccs will inot be subject to access charges.
47

ARGUMENT
Under llir A d n i n i i ~ t r a t i \ . c Procedure Act and tlic Commission's nilcs. the
C'omniissioii 1i;is itii-isdiction to
"IFSUC : declaratory I

order to lerminatc a controvcrs!' or to

22

rctnnve titicerlainty.""

The applicability o t access charges to phone-to-phol1e atid <>tJlcrfonlms of

IP tclcpliony

t i w v presents a conrrovcrbq i l i a t requires rcsolution by the Cornmisston.

Foremost, incumbent LECs 11aw crcatcd a controversy over the applicahilily nt'
intcrstatc access c1i;irges to phone-to-phone

IP telephony services by cnpaging i n ~ c l l ' - h c l p Attcr

failing to persuade the Commission 10 declare [hat providers of thcsc scrviccs must ordct intcrstatc iiccess scrviccs, iiidividual incutiibeiit LECs havc begun to refuse propcrl) 10 Iprovision cnd Liscr scr\,iccs to terminate tlicsc scrviccs. to rcfusc to complcrc calls over tacilitics tliat were
lire\ intiill provisioned, and to asscss interstalc acccss charges on calls from other statcs t h a t arc

LcI1ii111atc11 tliroufh ('LECr and tlic ILfC,' reciprocal cornpcnsalion trunks. Ratlicr

Ihi

lilignling thc l a w f i i l n c s s o l t h e s c ILEC actions on piecemeal case-by-casc bascs. ,4TXT i s

lhti2inz this petilion for a dcclaralory ruling that interstate access c h a r y x cannot now be
~sscsscd t h i s traffic and that 4T&T i s lawfully terminating the traffic over local business on lilies. Accordingly. a declaratory iuliiig i s liere required to resolve a n actual controverby tliat i s
IV It h i 11

tlic Co ti1m i ss ion ' s

C Y C Iiisive

.j urisd i ct i011.

Further. by issuing tlic r q u c s t e d ruling. tlic Conitntssion w i l l ;11so bc providing leadership and guidance to states. w11o rccogntzc t h a t uiiiform rttlcs should go\ ern t h e ;ipplicabilily ofabovc-cosr acccss charges (be they tntcrilatc or intrastarc) to V O l P lclcpliony

a n d \vIio Iiavc cndcavorcd to follo\v the federal rule in dctcrnmining the applicability ~~t'iiitrastatc
;~cccss charges t u In(crnct and othcr such traffic. That tlic

NYPSC lias rcnchcd a diffcrcnt

c o ~ ~ c l u s i o t i 111ciipplicablc lkdcral rille iliaii havc two other statc cominissioiis widcrscorcs tlic 011

tiwd Tot- ilic Cnmmiasioii to cxcrcisc leadership on this issuc and to clarify the ticdcral rule.

23

As dctailcd belou. tlicrz arc two scpamtc rcasoiis \vhy tlic ILECs' ;iccebs clial-gl:
xvxsiiictits

on ATSrT'5 phone-to-photic IP tclcphon); services should bc dcclarcti unliiwlitl

1.

PROI'IDED O\'ER THE INTERNET, THEY MUST BE EXEMPT FROhl

BECAUSE ,AT&T'S PHONE-TO-PHONE I P A N D OTHER SERL'ICES ( \ R E

REQUIREMENTS TH.AT THEY PURCHASE ACCESS SERVICES OR P A Y ,ACCESS CHARGES.
Fii.st. w I i 3 t e \ c r i s t h e case lvitli calls ovcr "private" intcrcxchanfc nct\\.orks 11ia1
ithc

liircmct Protocol. ,AT&T`a IP-based scrvices arc provided over tlic Iiitcrncr ttscI1'. The
IS

ltitcriict

comprised o f t h c

\,at-ioity

"cotiitiion" Intcrnct backbone facilitics tliitt arc conncclcd to

\\,chzitcs i i t i c l that :ire iiitcrcoiinccrcd t o one anothcr tlit-ou!ji pcering arraiigciiicnts. Tlic calls a t
i s w c ai-c traiismittcd ovcr tlic wine "cotnnion" Internet backbonc facilities that cnl'ry ISP and a11

otlict. typcs o f p i h l i c Internet traffic. And, as dctailcd ahovc. the provision o f \ ' O l P scrvtccs

ovcr tlic Ititcrnct I-cqtiircd ATGiT to makc large invcstmcnts in 1P technologics
c o t i i i i i o t i Internet backbone l a c i l t t i c s to

t l i i t t Lipgritdcd i t s

alluw tlictn to transmit voice incssaycs at the siitiic I c ~ c I s

ol'qunlity tliat Iiaw bccii pro\,idcd b y .4TSrT's circuit suitclicd Ion2 dislancc neIwol.k. Tlicse
i t i \ , c \ t i i i c i i t h \I c t ~ c fiirthct- incccsury IO
\

nchic\,c tlic ultini;itc betictits of I P - tlic I p v i s i o n of integrated basis - and ATSrT i s iiow pro\ tdii~:

oicc, data. and enhanced scrviccs

0 1 ill1 1

L.nhanccd \`otcc prcpiiid c:iid scr\.iccs a s \ ~ c l a s hasic phoiic-to-pliotic I P tclcphony o v e r thcsc I

ttpgratlcil Ibcilitics. Voice \cr\,icc i n s inow bcconic otic IP application ot'ATJtT.5 Inlcrnct

hackbonc. aiid
xwtcc>.

(lit

in\csttiiciits

L\

ill ;tIlci\\~ a range offuturc ititcr;icli\,c

VI)ICC

and otlicr cnhanccd

It

slioulcl hc scli'c\ d e n t tlint. d i a t c v c r the case w i t h the f h i s of pliunc-to-phone

I P rcicpiiotiy

S C ~ V I C CiSl ~ i mcrcly ~i

ttsc Intcrnct Protocol, abovc-cost and IiicfficIcrit ~ICCL`SScliargcs
arc transmittcd ovct- tlic Intcl-net

c a ~ i i i o r applied to phonc-to-pllolic tclcphony services that bc

ilsclt`. Ll

S \Vest i . c c o y i x d this point

in i t s A p r i l 1999 pctirion for a dcclaratow rilling. Thar

petition csprcssly cxcludcd calls that arc transmitted over t h e Internet froni its dctinitioii o1`thc
~phoiic-to-phoiic tclsplioriy scr\.iccs that. i n U S W e s t ' s !Jiew, were required io ordcl 1P

oriyinatin; and lerminating access services and to pay acccss cllargcs.4`1

Thc reality i s t h a t fc\v things would he p o m ~ l i a l l y more destruciivc ottlic
~ I c v c l o p i i i c n ~ thc Iiitcrnci ~ l i a n of ~\:otiId ; rule h a t prohibited lntcrnct scrviccs tiom using local 1

scr\ ices to i - c x l i end iiscrs and 1ha1 rcqtiircd that they pay tlic access charges t h a t have bccri l h i i d L l i n e riitc stiucturcs that arc "above-cost" and o
cquiLalcnt ol`a Lax
nil

"inefficient.""'

That would be llic

tlic Iiitcrnct, aiid would bc flatly contrary to the congrcssioiial dccrcc that

11icCoiiiiiiission "preserve tlic free aiid coinpetitivc market lliat presently exists for tlic Iiitcriict
iiiicl ~ t l i c r iiitcmctivc comptitcr scr\ ices, tinfcttercd by Federal or state regulation.""

A frcc and

coiiipctili\'c markc1 is one in w l i i c l i providers arc frcc 10 subscribe to services that arc efficient

aiid arc not ai-titicially required hq' regulation to ~ i s c scrviccs that havc rate structures that arc
`.abo\'c-cost" and "iiiefficicnt."~"
11.

THE ILECS' ACCESS CHARGE ASSESSSZENTS VIOLATE THE COM.1lISSlORi'S POLICY OF EXEhlPTlNG PHONE-TO-PHONE II' TELEPHONY SER\:ICES FROM ACCESS CHARGES PENDIUC, FliTURE COM\.IISSION .ACTION.
Second. c \ ' c i i if XrsLT`s phone-to-phone services merely ~ i s c d ill :I IP

.-pri\ iitc" iiirci-cxclinngc ncl\\~orh.the incuiiibcnt LECs' L I ~ C C ~cliargc ;isscssii1cnh i l I c q ~ i i t c S
clcarlq contrary IO the policy that tlic Corninission
113s

lollowcd over tlic past tivc y c m Tlic

Commission hiis t`ollowcd a "w;ii[ and see" policy

iii

whIcli all iiascciit ~ ~ l r o n c - t o - l d ~ o i i c

25

JP tclephoiiy 2nd otlier L'OIP scr\,iccs \Yere lreatcd as excmpt froin access cliargcs ;II ]cast until
the scrb iccs had iiiatured and t h e Commission could consider the proper trcatmcnt ot' them
011 3

coinplctc record. A s the L ' n i i ~ c m oS P I . i Repor! htated, the Commission u . u d d h u t > dctcrminc / ~.~ '

charges "similar" t o thosc applicable Io iiilersta~e circuit switclicd

SLT\'ICCS

rliould

kipply to .'ccuraiii lornis" of tlicsc scwices and could adopt rules that allow their
tioiidircrimtn;ito~ assessinelit on a l l similarly situated providers of VOIP scrvicch." This is a policy t h a t tlic ('ommission had previously bccn nblc l o Ixirsiic througli the simple device otrcpcalcdly refusing the incumbents' requests for a ruling l h n t Iprovidcrs of
pIioii5-t1)-lilioiic 1P tclcplioiiy scr\ iccs arc required 10 order originating a n d terminating acccss

bcrviccs and to piiy acccss charges. I n parricular, the refiisal to dccide the issue Itad
i-ccently
~

~

until

meant the providers

of phone-to-phonc and other VOIP services could. and did,
end tiscr local services and that thcy all cnjoycd the

(iriginalc nnd tcrininntc their

SCI~\~ICCS over

I s r ;~cccssc h r g c cxcmptions. citlicr r/c,ji,i-c, or t/c.,/irc.ro. I-lo\\cvcr. bccausc incumbcnts have
IIOV,
~CSIII.IC~

to sclt-help, dcnicd cnd ubcr services to phone-to-phone IP tclcphony pro\.idcrs.

and unilaterally asscssed acccss cli;ii-go, !lie incumbents i a v c lbrccd thc Comiiiission to address
tlic
ISSLK

expressly. I t shoLild n o w do so by lbrrnally ratiryiiig the policy it has long tollowcd inid 1~lioiic~Io-1plioiic' XI-\ iccs \vi11 he itnmunc froin ; ~ c c c s s I F charges tinless ;ind until tlic
011

hold

tli;it

C'omniissioti adopts i.uIcs t h a t provide {'or prospective asscssnieiit ol'tlic clinrgcs

some or all

of thcsc wi.viccs.
Thcrc arc niultiplc. cotupelling rcasons h r thc policy that the Commission lhas long lollowcd. Thcy all dictatc
tliiit

llic policy now be forinalized i n

il Commission ruling that

26

bars rlic self-help iiicasitrc'r o f tlic

incumbents and

exempts all VOlP s c n i c c s from access

char~es pendins tlic adoption olprospcctivc rules.

First. I P telephony ser\,icc offerings arc

innovative and c u p c r i m c n t ~scn ices I l

~

I

rcprcscnt a tiny fraction ( b c ~ w e c i il ' %and 5%) of interexchange calling." Tlicy tis< t i c u IP
rcchiiologics that a l l o w packet s\vilclied data networks to provide voice sci-vicc\ i ~ l ' aqualily

~ . o m p a r a b l co circuit switched nctworks. and providers l i a w cxperimcnted with t
i i i t i o \ ~ ~ i i iiiictliods of pricing slid provisioning these services. To preiiiaturcly \c
intiovati\c

1 1 wray 11

of

SII~~CCI

n c u IP ser\wccs

to thc regulations applicable to established circuit switchcd scrviccs.

;ind a l l their ;Ittcndants cobts. could stifle innovation and competition, tor a l l the reasons that
C'liaiiiiian Powcll identified iii l i i s concurrence to the Urfivrr.vn/ Service RejxJrf.''
..

hi this rcgard. evc11 i f i t wcrc clear that thcse new IP-bascd scrviccs w i l l
c\,cnltinlly hccomc no morc tliaii substitutes for circuit s\vitcllcd Ions distance scr\:iccs
~

LIS

it

p i ~ c t i t l y5 i
10

1101.

scc i,7fizr - tlic Conimissioii should aIlo\v t h e services to cstablisll tlicniscI\,cs a n d

iniiturc bctbtc sub.jecting them to tlic above-cost and inefficient access cliargcs that ;ire

~ipplicablc cstsblislicd circuit switclicd services. For IP also h a s the porential to r i c l ~ ~ c v c to trunking ct'~ciciicicsthat could pi-ovidc a inarc efticicnt means of carrying even h t a d ; l l o n c voicc scr\'icc. a n t i 11ic C o i i i i i i i s s i o ~ policy should bc to cncoul-;l~ctllc bcgintii~i: of ~'~
;I

Itni~s~tIoti

f r o m citctiit switched to VOIP scrviccs. A moratorium on ~ C C C S S cliargcs on i n i t i a l VOlP
sctviccs i s c r i t i u l to a l l o \ r this tramition to begin.

SLxond, J P Iclcpliony scrvices arc s t i l l evolving. and thcy hold tllc ptmtiiisc to be
l i t nioi-c t h a n

suhstittttcs for today's circiiit switched interexchangc scrviccs. T l l c primar!:

iitti~~CtiOii ofupgradcd

I P facilities i s not the provision of stand-alone voice scrviccs. but tilc

ititcgratcd provision of Loice. data. and cnlianccd services." This is retlectcd. i n p x t . i n tlic tact
111a1 sonic

of tlic \,oicc scrv~ccs AT&T provides civcr IP today arc cnhanccd pi-cpaid C J K I Ilia1

i,oicc services that arc information services. not tclcconiniunicatioiis services. I l o w
fiiiidanicntally, cven the VOlP s x v i c c s that today have characteristics

or t ~ l e ~ c ~ i ~ i ~ i i u ~ i i e ~ i ~ ~ i ~

w r \ j i c c s may be transitional incasurcs and inay cvolvc into integratcd SCI-viccs wliicli voicc is in

mcrcly cme application of a n i n t e p t e d voice. data, and cnlianccd services platform. Tlicsc arc ~poiii~s that
1111:

Florida PSC cit1:d in following the Comiiiission's lead and deterring llic ~ s s t ~ f oe
5-

I h c applicability of access c h a r y s to plio~ie-to-phoneIP l r a f f i c to future p r o c e e d ~ ~ ~ g s . ~

Third. prcninnire tictcrmin;lrions of thc applicability ofacccss charges rihk scvcrc discrimination that will distort competition among dilleretit services thal
LIX

the same

IP rcchnologies and that have far more

iii

co~nnion with onc aiiotlicr ilian they do wit11 circuit
iii

sbitchcd intcrcxchange services. Thc Cf17ive/:ctrlScr.ike R q w f made this v e v point

dclkrrinp

ilic q i i c ~ ~ i ~ i n \ \vlictlicr "cci~taiiiforms" 01 phone-to-plionc I P telephony services sliould pay so11ic
l i l r n i o f ;icccss charges hecaiisc tlic scr\.iccs had bccii tcntntivcly classilicd as

tcI~.~~inmiitiications\ ~ ~ c c sA s (lie Coiitmission cinphnsizcd, the distinction scr .

tlial

the

('oiiimissiotn had tcniativcly drawn h c ~ \ v e e i "plione-to-phonc" and otlicr forms 01I P Iclcphony i
(c

~ ~ t i i ~ ~ ~ ~ ~ e ~ andt conipiitci--~o-cunipt~tcr) a n cxtrcnicly fragile one ~- ~-pIiiiiie was
iX

1h:t1

could bc

quickly ovcrtakcn by c l i a n y x I n kchnology atid the inarkctplacc.~

Fot cxaniplc. thc tcnIati\'c dctcrminatior that "conipiitcr-to-coinputcr" scrvi
;II.C

not t ~ I c c o ~ n r n t ~ n i c a ~ eo ~ i s rested on tlic characteristics o f t h c '.do it yo~~rscll" s i n iccb \,oicc

28

that thc h i w ~ : s d w i w Rep)/-[ S cikd to distIn~iiIsh 1)iiotic-to-pIroiic trom plionc-to-coinptitcr a n d computer-to-computer scrijices: wlict licr the call i s 'iddrcsscd to inuntbcrs assigned to the North ,Amcricaii Numberins Plan ("NANP") i~iitlicr than to the TC:ll' address o t a pnrticulai. coinptitcr. SCY, 5 8 . This distinction i s pal-licularly artiticial id.7 hccausc c\cii i f 3 call i s addressed to ;I computcr, thc contpulcr will, i n many instances, bc pl1ipgcd into a tclcplionc line that h x an N A N P tclcplionc nuinber.

l ' ' ) Id. 4 00. '" /t/. ; l - ~ i c r c one oilicr aitributc 80, IS

i'J /i/.

7 87

-

r c g u l a t o t ~classitication o t various scrviccs. but whcthcr incumbcnt LECs m a y

L/~Y(./.~/JI/JICI~~

anlong them by I-cqttiring a11 or some IP telephony provtders to pay access charges and by
m m i p l i n : other providers o f VOIP services from those charges. The answer to t h 3 t q l ~ c s i i o i i ilocs n u l htrn on lhe distinction bct\4,ceti phone-to-phone and other services, but rather oil

\vhethcr ditfcrent providers arc using idcntical facilities "in the sainc way [and] fot- ~ h s t i i i c c ]pLll-posc'..h?

I n h i s r c p d , l l i c primary purposc o f $ ?02(a) o f t l i c Act i s to prcvcnt
~liscrimiiiatic~ti siiioiig coiiipcting scrviccs and the resulting marketplacc distortions."' Hcrc. the 11cci\i\c kicl i s that all lypcs o f VOIP providers compete w i t h one anotlicr through IP
tcchnologics. ;ind tlicy a l l use identical local exchange tacilitics for tlie same piitposcs. Most

starkly. ;ill phonc-to-phone and computer-to-phonc scrviccs arc terminated in prcciscly the same \yay. for they all route trafiic iii voice (TDM) format from the providers' lemiinaLinf gateways I n callcd pai-tics o \ cr circuit \\r,ikAxI local exchange ficilities.
~ c t - r n t n a t t ~;icccss charges on ig
(34

Yet tlie i n c u m b e i i ~ s \vould
1101o n

IISSCSS

Xr&T's plionc-to-phonc scrviccs but
110

cotiip~ttcr-to-plioiic

scrviccs. Beyond that. there arc also

material distinctions in h c uscs ot'lnciil f x i l i l i c s b y n ~ 7 ~ '

ot h c

L ;1no1is

Ibrtiis o f VOIP sci~viccs.he tlicy computer-to-compittcr. plio~ic-to-~ilio~~c.
[ t thLts i s critical that the Coniniission aclopt ~pulicics

~oinlpittcr-to-photic.or pIi[,iic-to-cornpiitel.

that \vi11 assure that particular IP providers arc not saddled ~ i t ldiscriminatory cliargcs that do i
tioi apply t o conipclitors.

The w:iy to achieve this fundatncntal statutory objcct i s not to allow

c l i x i - i t i i i tintory asscssiiientn bascd on ilic tentative distinctions iii tlie b/7Iver,sd .SC,/-IWC, ~ p ~ ~ l - 1 . R

but to : i I l m ~ all VOIP providers to cnjo) the

ISP cxctiiption until the Commission can compile a
alid

cvinplctc record, determine thc scrvices tliat should and should not bcar access cli:Ir:c>.

adopt rules that assure nondiscriminatory a s ~ c ~ s i n c r iot C wliatcvcr charscs a1.c approprlatc. s
Torn131 ~ i t i l i c a t ~ o n the policy that tlic Commission lias followed for the past years \vi11 iicliicvc of
that end.

Fourth. and relutcdly, u n t i l prospective regulations arc adopted bused 011 J
complctc rccord. tlic Coinniission iiis rccognizcd that i t would also bc exceedingly "ditlicult." it'
1101 impossible.

h r access chargzs t o he iiondiscriiniiiatorily assessed against cvcii a11 providers
hi

of'plionc-to-plioiie IP telcphony services.

In particular, the Rcyorl identified tlic difficulties o f

~~ilctcmiiii[iiig] wlieiher particular phonc-to-plioiic c;ills are interstatc, a n d thus sub,jcct to tlic

Iixicral iicccss c l i a r ~ c c l i c ~ i i c . intrastate. s cir

.rho

One reasoli for thcsc difficultics i s i l l a t because
110

innny firms providing only basic phone-to-plionc 1P lelcpliony liavc had

rciison to track or

/pass C a l l i n g Party Number. there often i s no basis to idcntify the calls to w h i c h :~cccsscliargcs
cuiild apply or w e n reliably to cstiiiiatc the pcrccntngcs 01iiitcrstatc and inlrastatc
LISC

on tliosc

cnlls tli;ii arc clcarly tclccomiiiuiiications sci-vices. Plainly, i t would b c pcrvcrsc i M T & T ' s

V O I P scr\.iccs could aloiic be singlcd out Ihr access cliargcs bccitusc A T B i T passcs

CPN.while

othcr

1pr11\idcrs

~t plionc-to-plionc IP rslcphoiiy services would bc csciiipr Irum tlicsc cliargcs

because they do iiot pass C'PN.
Ftlrtlicr, providers of plionc-to-phone IP telephony iisc their facilities to provide
un!innccd a s well as basic services. For examplc. ATBiT's cxisting VOIP scr\Jiccs incltide

c.iilinnccd prepaid calling cirrd sci-\,icescis wcll as basic Loice scrviccs, ;ind AT&T's scI-vicc could
be cxpniidcd to include othcr cnlianccd scrviccs and to tightly intcgratc the basic voice and

.

31

cnlianccd services. Similarly, oilier VOW providers (c.x.. Net-2-Plionc) offer scr\,iccs t h a t can bc inlcrc1ian:cabIy

used to place either computer-to-phone ccrlls (which arc cnhanccd).

phonc-to-l'lioiic calls (which h a w characteristics of hasic services) or conipiit~r-to-conipiltur

calls (which h a \ e k e n held not to bc tclcconimunications services), and there Iias b L L l l 3

110

occasion

to

de\ clop mcthods to track the information that would permit detcmiinations o r \ v h i c l i

calls arc t ~ l ~ c o m m ~ i n i c a i i ands ciruld be subject to acccss charscs and which ah: cnhanccd that on arc not su1,lcct to
IICCCS\

chnrpes. The practical difficulties of making notidiscrimin~itor~~ ;ICCCSS

cliarfc iisscssmciils providc a tiitthcr reason for il rulc barring tlic imposition o f acccss cliargcs

on a n y \'OlP pi-ovidcrs ~ i n t i lrulcs can be adopted that will allow the prospective
no~idisci-imin~torq assessincut o f whatcvcr cliargcs :ire found proper.

Finally. the adoption of

3

rule that ratifies the longstanding de,lircto ISP
01'

cxcniption foi- all VOlP sci.viccs \rill cause no cognizahlc hami to incumbcnts

to a n y objcctivc

of'thc IC!. Fii-st. quile apait froiii tlic f:icl VOW rcpresents a tiny fraction ofiiitcrc~xcliii~i~c
c:~lling. tlic Commission Iias re.jxtcd the claim that end user charges do not liilly compcnsate

~ncumbants all Icgitimale costs. tor

h-

I n this regard. AT&T is either t c m i i n a t i n ~ c:rIls ovc1' local

pri\j;ile l i n e s or I ~ t ~ s n i c s s obt~iinedfrom ILECs or obtaining Iliesc facilities from CLECs and lines
rcrminatnig calls to ILEC custoiiicts over rcciprocal conipcnsation arrangcnients to which cost-

bascd n t c s apply. In eithcr case. tlic lLEC is compcnsatcd either through AT&T's paymcnls for

ILEC' flat-rate local privatc lines or business lincs purchased undcr end user tariffs

01-

tIiroLigIi

tcciprocirl compcnsation payments Ironi the CLEC to the I L K Furthcr, tlic nonpayment o f
:~cccsscliargcs has n o advcrsc clt'ect on universal service.

AT&T pays universal scrvice s~ipport
Intcrllct

pilyliicfils on the rcvcnucs from a11 its non-cnhanced VOIP calls that i t carries over

32

m d thai Fall \+ithin the delitiition o f phone-to-photic IP tclephony and oftclccorntii~~nicattoiis xrviccs

I n short, tlic Commissioii should fomially rarify the policy that

il

has tclllnwcd for

[lie past fivc years ofcxcmpting all \'OIP services from access charges until such lime its rhc

C'omtiiissioii comprehensively rLvicws thc evolving ssrvices. dctcmiines the appmpriarc charpcs
tlia! dioiild apply to them.
iind

adopts appropriate prospective rules that allo\vs ilicit

~ioridiscriiiiiiintor?/ assessment on ;III sinlilarly situated scrvicc providers,

CONCLUSION

FOI.the reasons stared. the Commission should enter a dcclnratory
( Ij

I-tiling

that:

L'OIP scrvlccs that are carricd o w r llic Jritcrnct are pennanently entitlcd IO subscribc to local

xrviccs atid cxctnpt from a n y rcquirenient that they subscribe to iicccss services or pay
;ih~i\~c-cost acccs\ charges. and ( 2 ) all o~licr phone-lo-photic

1P and VOlP tclephony s c ~ ~ v i c arc cs

excmpt ii-om ;icccss chargcs utilcss atid i i i i t i l thc FCC adopts rcgulations t l i a l prorpcctlvcly

lpi.nv idc oiherw i sc .

RcspcctCully s~ibmtttcd,
'sr M a r k C . Roscnblum Mark C . Roscnbluin Lawrence J . Lafaro Judy Scllo AT&T Corp. Room 3 A229 900 Route 202/206 North Bcdniiiistcr, New Jersey 0792 I [phone]

David I+:. C;irpcntcr Sidlcy Aitstin Brown 8: Wood Bank Oiic Plaza I O S. Dc;irhorii C'hicag. Illinvis 60603 ( 3 I 2 j 853-7137 Davtd L. [.awson lulie M.Zainpa Sidle) . A t ~ ~ I iBrown &. LVood L L P ii 1501 K Strcct. N . W li'iisli i ngton. D.C. 20005 ( 2 0 2 1 730-8000 Octobcr I X. 2002

33

CERTlFICATE OF SERVICE
I hereby certify t h a t on this 18th day of October, 2002, I cnuscd truc and corrcct copies of tlic forgoing Petition for Declaratory Ruling That AT&T's Phoiic-to-Phonc TI' Tclcphony Serviccs Are Exempt From Access Charges to be servcd on all partics hy mailing,

postage prcpnid to their addresses listed on the attached service list
Datcd: Octobcr LE, 2002 Washingtoti, D.C.
i s / Pcter Andros

Pcrcr Andros

SERVICE LIST
klarlcne H . Dortch
Scci-etary Fcdcrnl Cummunications Coinmission

455 I zth Strect, S\V \I';i~hington.D.C. 20554

2

Exhibit R

Service Provider Interconnection for Internet Protocol Best Effort Service Network Reliability and Interoperability Council V Focus Group 4: Interoperability
1. Introduction 1.1 Overview Focus Group 4 of the Federal Communications Commission's (FCC) Network Reliability and Interoperability Council (NRIC) V is tasked with assessing and improving interoperability among data networks, including Internet providers. There are several forms of interoperability, including interoperability of equipment within a single provider network, and interoperability related to the interconnection between provider networks. The former is primarily addressed by protocol standards and by a variety of testing efforts. This report will focus on the latter This report deals with interconnection between Internet Service Providers. The report describes the various interconnection arrangements, which are presently in use in the Internet, and identifies some areas that affect interoperability and reliability. This report is limited to best effort Internet Protocol (IP) services. The aim is to serve as a framework for ongoing efforts, and to explain the related issues. There are numerous aspects to interoperability among Internet networks, including: · Routing aspects of ISP interconnection; · Administrative and economic aspects of interconnection; · The performance and scalability of Internet interconnections; and · The robustness and security of Internet interconnections. This report seeks to identify the most important issues and exposures in each of these three main areas, and strives to identify opportunities to address or mitigate these risks. Where a solution is not readily apparent, we suggest directions for future research and investigation. There are other aspects of interconnection between ISPs, such as operational coordination of issues such as security and quality of service, which focus group 4 is not currently working on. Few mediums have grown as quickly as the Internet, or continue to change as rapidly. We expect and acknowledge that the practices we describe and document will change over time. It is therefore likely that the issues addressed in this report will need to be revisited in the future.

1

1.2 Terminology 1.2.1 Acronyms AADS AS BGP CDN CIDR CoS DNS DoS FCC FG4 FOIA IGP IOPS IP IS-IS ISP ISP-ISAC IT-ISAC MAE MPLS NAP NOC NRIC OSPF PoP SKA TCP Ameritech Advanced Data Services Autonomous System Border Gateway Protocol Content Distribution Network Classless Inter-Domain Routing Class of Service Domain Name Service Denial of Service Federal Communications Commission Focus Group 4 of NRIC Freedom Of Information Act Internal Gateway Protocol Internet OPerations Group Internet Protocol Intermediate-System to Intermediate-System routing protocol Internet Service Provider Internet Service Provider - Industry Sector Advisory Committee Information Technology - Industry Sector Advisory Committee Metropolitan Area Ethernet/Exchange. Multi-Protocol Label Switching Network Access Point Network Operations Center Network Reliability and Interoperability Council Open Shortest Path First routing protocol Point of Presence Sender Keep All Transmission Control Protocol

1.2.2 Terminology Autonomous System Bilateral Settlements A group of routers under a single administration. See section 2.2. An arrangement in which each provider invoices the originating end user, and then financial settlements are made between providers to offset originating call imbalances. An arrangement in which two providers each pay part of the cost of a circuit between the providers (e.g., each pays the cost of the half-circuit from its end to the other end).

Half-circuit settlements

2

Hot Potato Routing Internal Gateway Protocol Internet Internet Service Provider Paid Peering

Same as Shortest Exit Routing. The protocol used within an autonomous system. The global interconnected set of IP networks. An organization which offers Internet IP connectivity services to customers. A form of peering in which one party pays the other, in order to offset perceived differences in cost or value received. An agreement between ISPs to carry traffic for each other and for their respective customers. See section 2.5. The decision criteria that a provider applies in deciding with whom they will peer. An arrangement in which each provider invoices the originating end user, but no financial settlement is made between providers. A form of inter-domain routing in which a packet destined for a neighboring ISP is sent via the nearest interconnect to that ISP. See section 2.2. An agreement where an ISP agrees to carry traffic on behalf of another ISP or end user. In most cases transit will include an obligation to carry traffic to third parties. See section 2.5.

Peering Peering policies Sender Keep All

Shortest Exit Routing

Transit

2. Background 2.1 Basic Data Connectivity in the Internet An Internet Service Provider (ISP) is defined to be an organization, company, or business entity which is offering IP packet connectivity as part of the public Internet. An Internet service provider might optionally also offer other services such as dial-up IP services, Domain Name Service (DNS), voice over IP, or traditional voice and circuit services, or may also be a content aggregator or content service provider that bundles content with IP transport. These other services make use of IP packet connectivity. This report focuses on basic IP packet connectivity.

3

The current Internet is supported by a very large number (at least thousands) of ISPs. ISPs range in size from very small (as small as serving an individual building) to very large (global). It is common for an IP packet, in its path from source to destination over the Internet, to traverse multiple ISPs. It is therefore necessary for ISPs to cooperate in the provision of Internet connectivity services. For example, it is necessary for ISPs to negotiate agreements to achieve connectivity between these various IP networks. Typically, today in the Internet, the interface between IP service providers offers basic datagram IP interconnection, and supports only best effort IP traffic. In other words, today class-of-service (CoS) support is typically not offered across multiple ISPs. In the future ISPs may provide additional services, such as two or more classes of service and/or MultiProtocol Label Switching (MPLS). There might also be a need to support these types of services between providers. These issues are outside of the scope of this paper. Application level interconnection, such as the operation of DNS between providers, is similarly outside of the scope of this paper. 2.2 Overview of Routing in the Internet Routing in the Internet is generally divided into internal routing and external routing. Internal routing refers to routing within an Autonomous System (AS), where an AS might be a service provider network, or a contiguous and well-connected part of an ISP network. In most cases either "Intermediate-System to Intermediate-System" (IS-IS) [1] or "Open Shortest Path First" (OSPF) [2] are used as the Internal Gateway Protocol (IGP) within an AS. These protocols provide dynamic routing within a network, and can be used to support certain types of traffic engineering (such as balancing of traffic flows within a network). However, IS-IS and OPSF do not support complex policy-based routing such as is needed between service providers. Routing between ASs makes use of "Border Gateway Protocol version 4" (BGP) [3]. BGP supports a wide range of administrative, engineering, and architectural policies which may affect choice of routes, and also has been shown through operational experience to scale to support a very large Internet with more than 100,000 routes. In many cases ISPs use shortest exit routing (also known as "hot potato" routing). With shortest exit routing, a packet which is to be forwarded via a neighboring ISP is sent via the nearest interconnect to that ISP, without concern for where in the neighboring ISP the destination is actually connected. In other words, the packet will use the interconnect closest to the point where the packet enters the first ISP. Consider two ISPs which span the same geographic area, and which are interconnected in multiple locations. Figure 1 shows an example of two backbone ISPs, which are interconnected in four locations.

4

ISPx

Backbone ISP1

Backbone ISP2
ISPy
Figure 1: Illustration of Shortest Exit Routing Consider a packet originating in service provider ISPx (served by Backbone ISP1), for a destination in service provider ISPy (served by Backbone ISP2). ISPx forwards the packet to its backbone service provider, which is ISP1. ISP1 then does a normal route lookup, and finds that the destination is served by Backbone ISP2. ISP1 then forwards the packet to ISP2. With shortest exit routing, ISP1 will use the closest connection to ISP2, as illustrated in figure 1. ISP2 then forwards the packet on to ISPy. In this example, the ISP whose customer is originating the packet (ISP1) needs to forward the packet for only a short distance. The ISP whose customer is receiving the packet needs to forward the packet for a greater distance. This is a common occurrence when shortest exit routing is used. If both ISPs use shortest exit routing, the paths that the packets take will not be the same in both directions, even between the same two end points. 2.3 Asymmetric Traffic Load A significant percentage of the traffic in the Internet goes between web users (i.e., personal computers and workstations) and web servers. In general the volume of traffic from web user to web server is relatively small (consisting of requests for content), and the volume of traffic from web server to web user is relatively large (consisting of the content itself).

5

This implies that in many cases a particular user of the Internet may originate an exchange of data, for example by using their personal computer or workstation to query a web server. However, the system which initiates the exchange is typically the source of only a small percentage of the total traffic, while the web server which is offering a service is typically the source of the bulk of the traffic. Where shortest exit routing is used between ISPs with a similar geographic footprint, this means that the amount of traffic is different in each direction, which may cause one ISP to incur more cost than the other. In general some ISPs may be primarily offering services to residential customers, others may primarily offer services to web servers, others may primarily offer services to business, while still ot