Hello, Congress? the Phone's for You: Facilitating the IP Transition While Moving toward a Layers-Based Regulatory Model

TABLE OF CONTENTS I. INTRODUCTION II. BACKGROUND A. Circuits to Packets: The IP Transition's Technology Change, and the Reasons It Is Needed B. Telecommunications Regulation: A Brief History C. Growing Pains: The Joint Jurisdictional Model Conflicts with Modern Network Designs, Leading To Absurdity D. State Regulatory Issues and Remaining Interests E. The IP Transition Thus Far F. Government and the IP Transition III. ANALYSIS A. The Old Ways are Failing: Federalism and Packet-Switched Networks B. Change Is Needed, but What Should It Look Like? C. What Should the Next Act Look Like? D. Congress Is On the Job, but Can We Afford to Wait? E. The FCC Can Lead the Way IV. CONCLUSION I. INTRODUCTION We tend to take technology for granted these days. We expect the power to be on by default, we expect water to come out of the faucet when we want it, and we expect to hear a dial tone when we pick up a phone. Little thought is given to the intricate systems that support these services, and that's not unreasonable--one of the chief benefits of such services is that we can focus our energies on other things, instead of having to provide water, heat, or communications services for ourselves. At times, however, these systems do require attention. Now is one of those times, as the technology which underlies our wireline communications system must be replaced. This process is referred to as the IP Transition, and it is already well underway. (1) Technology transitions have happened before, and bring with them many benefits. (2) As noted by FCC Chairman Tom Wheeler, "[H]istory has shown that new networks catalyze innovation, investment, ideas, and ingenuity. " (3) This transition will bring many such benefits--these new networks will provide increased functionality and capacity, for both wired and wireless users. (4) This transition will not be simple, however--the wired phone system has not seen change of this magnitude in decades, and the regulatory framework which governs these systems are in some cases nearly 80 years old. While many of these regulations continue to serve necessary functions, they were created in a world in which network and service were inseparable. Today's technology works differently, and it is a constant struggle for regulators and service providers to adapt these new networks to the existing regulatory models. Packet-based networks, which support Voice over Internet Protocol (VoIP) services, also support services of other types, and are not regulated in the same manner as circuit-switched systems. In accordance with deregulatory policies intended to permit the free growth and development of new technologies and services, the FCC has largely refrained from substantially regulating VoIP providers, and has to an extent preempted state regulators from managing these services, as well. Separately, a majority of states have partially or completely prevented their Public Utility Commissions (PUCs) from regulating these services. (5) On their own, these deregulatory actions pose no major issues for the phone system as a whole, as the system remains built around legacy, circuit-switched infrastructure. They act as intended, giving new technologies and new businesses the freedom they need to innovate and evolve, to provide new services to consumers, and to increase competition in the marketplace. One of the major challenges presented by the IP transition will be reconciling new technology and service models (specifically, an environment in which services are divorced from the network that carries them, rather than intertwined, as has traditionally been the case) with the rigid, legacy-network-based regulatory framework currently in effect. (6) In particular, the transition presents a strong challenge to the joint jurisdiction over voice communications shared by state and federal regulators. The FCC has acted to keep its hands off VoIP in most ways, (7) while a majority of states have similarly prohibited their PUCs from regulating VoIP. …