AT&T's view on the transition to an all-IP network

On June 15, 2012, Jim Cicconi, Senior Executive Vice President-External and Legislative Affairs with AT&T, gave a thoughtful talk about telecom regulation and how it is thwarting development of the innovative benefits of an all-IP network.

To hear such remarks from an AT&T executive offers some encouragement for those who do not benefit from the legacy telecom regulatory policies. He gave the talk at the Voice Communication Exchange workshop in Washington, DC. The Voice Communications Exchange, led by Dan Berninger—a VoIP pioneer—is a non-profit organization with the goal of accelerating the transition to an all IP network for telecommunications by 2018. Jim Cicconi's remarks from the Voice Communication Exchange meeting are re-posted here from the AT&T blog.

I think we are in a unique position here today—a position of consensus, or at least near-consensus. I believe the timing of this session, and its theme, are important because increasingly three things are becoming obvious to us. That the communications market is very quickly evolving to a broadband, IP market where the traditional services simply become applications riding on an IP infrastructure… and where consumers not only have thousands, of different ways to interact with each other digitally, but they are in control of what they use and how they use it. That this move to IP is a very good thing, and that it’s in the public interest it move even faster.

And that the traditional regulatory approach—whereby individual services were each regulated by their own set of rules inside of a regulatory silo—has been totally overtaken, and made virtually nonsensical, by this new IP world. So we are all here today to discuss how are we going to make this great leap from POTS to internet, from TDM to IP, from a voice network to a broadband network where voice is just one of many communications applications riding on that infrastructure. So while it may seem obvious, we have to get the policies right, we have to create the right incentives to get the infrastructure built and we have to preserve a marketplace where consumers are in control of how, when and the means by which they communicate with one another. And I’d submit that policymakers have got to move faster lest the old laws, regulations and mindsets that are still in place warp or even damage this vital transformation. Consumer Demand, Market Facts and Regulatory Modernization. Let me throw out a few facts to demonstrate the type of change I am talking about. Did you know that:

  • Every month, 700,000 consumers cancel their traditional landline services in favor of wireless or IP service?
  • One out of three households is now wireless only?
  • The number of wireless-only households has doubled since 2008 and is projected to cross to over 50% by 2015?
  • IP traffic from wireless devices will exceed traffic from wired devices by 2016?
  • Consumer demand for increasing amounts of bandwidth has led all national and many regional wireless providers, the tip of the “IP transition spear,” to upgrade their networks to 4G LTE and transition their backhaul circuits to a fiber-based IP infrastructure?
  • Over the past five years, AT&T’s wireless data traffic has grown 20,000%?
  • In response to that demand, AT&T has invested over $95B in its network in the past five years?
  • After years of talk about the digital divide, inexpensive smartphones in the hands of minorities and lower income people have finally begun to bridge that divide so that everyone—irrespective of color or income—can have access to the internet?
  • The days of businesses operating in neat silos are over?

Despite the neat silos anticipated by the ’96 Act, Google now offers voice services, we at AT&T now offer TV service, Microsoft does entertainment. Satellite companies are even talking about wireless services. All this change is being driven not by us, but by consumers. And we are all in the business of keeping up with consumer demand. These facts show that most consumers are already well along in making their own personal transition. But does anyone here think policymakers are making that transition as swiftly? So, what should policymakers do? Two things:

First, we have to modernize our regulatory structure in this country to ensure that the communications industry is able to evolve to its full potential. We have to avoid the temptation to drag our siloed, centuries-old regulatory approach into the IP world. Innovation is flourishing in the communications marketplace today. We continue to be the worldwide leader in mobile Internet and we have more competitive broadband choices—mobile or fixed—than virtually any place on earth.

But changes are going to be necessary to keep and expand the choices that are in the marketplace today. Policymakers have to embrace the transition by all infrastructure providers to an all-IP world. That is going to make some regulators—state and federal—uncomfortable. Because their regulatory hold is on services—Title 2 services—and a move to an all-IP world is going to fundamentally change the way we think about regulation in this country.

But it makes no sense to treat the Internet and IP services as if they’re one gigantic telephone. The economics of wireline infrastructure and investment tell us that we must evolve to the most efficient technologies if these companies are to invest, survive and thrive.

There are fewer people today connected to the POTS infrastructure than are not connected to that infrastructure. 1/3 of Americans are now wireless only, another 1/3 are VOIP customers. The economics of a monopoly voice world will not work in this environment. And that is not just because of technology. It is because the monopoly voice world for which our laws and regulations were designed no longer exists.

Regulations that impede this transition and direct resources and capital to the last century’s infrastructure are counterproductive and ultimately harmful to consumers. There are not enough resources to build out new, modern IP networks and still maintain the old one—with fewer and fewer people connecting to it—at the same time. The FCC deserves credit for reforming universal service in a way that recognizes the importance of broadband and this transition, but much more is needed.

Policymakers must realize that the key to ensuring the open and dynamic Internet we all want is making sure there’s a clear path with incentives to invest in new technology and network platforms. Regulatory overhang and uncertainty is a recipe to block that pathway to investment. We need clear direction from policymakers that we are going to allow these new Internet and IP markets to work and only intervene where there is a clear market failure, or when consumers have been abused.

I have talked for a long time about getting that type of clear direction from Congress and I believe it is essential not only for regulators to hear that clear message but also for investors to hear that signal as well.

Second, we have to realize that actions we take in the United States affect broadband policies worldwide. Countries like China and Russia, among others, are today advancing the proposition that governments should have control over the Internet. This is an important issue with enormous and frightening implications, and it has rightly united all of us here in the United States to work in opposition.