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U.S. policy makers readying for ISDN's advent
LEGISLATIVE AND POLICY FOCUS
U.S. POLICY MAKERS READYING FOR ISDN's ADVENT Robert G. Rogers The advent of integrated services digital networks (ISDN) is bringing with it some thorny challenges to Washington, D.C.; and a lot of the policy makers in this capital c i t y - i n the folksy parlance of U.S. politics-are heading for the tall grass! What seems to be so intimidating to U.S. policy makers is that ISDN is putting aside 50 years of conventional thinking about the technical details of the nation's telecommunications infrastructure. Also intimidating to the policy makers is their difficulty in communicating with ISDN visionaries. The stock in trade of the ISDN crowd, after all, is numbers, equations, things scientific. The stock in trade of policy makers is words. If all this sounds a bit overly disparaging, it's intended. It's intended to make the point that public p o l i c y - t h e traditional province of lawyers, economists, and assorted other wordsmiths- is but one of three areas of activity affecting ISDN.
Technology is "Engine" of ISDN Development Driving the ISDN development process-its real e n g i n e - i s technology, or more accurately, the user-responsive application of technology. Standards-setting is a second activity steering the world to ISDN. It differs from the public policy making process only inasmuch as its participants are primarily engineers. Public policy making, like standard-setting, is playing but a supporting role in the drama of ISDN development. The lead role, though, is being played by technology: the user-responsive application of digital electronics, fiber optics, microcircuitry, and software. It's a mistake for Washington policy makers to think that the evolution of I S D N - o r the more popularly touted Information A g e - i s totally in their hands. Likewise, it's a mistake for technologists to be intimidated by the jargon of the Washington crowd or by its bureaucratic procedures. Technologists should beware, nonetheless, of those colleagues of theirs who dismiss public policy makers as harmless lawyers who know little of technology.
Robert Rogers is director, regulatory affairs for Northern Telecom Inc., in Washington, D.C.
TELEMATICS end INFORMATICS
Vol. 4, No. 1, pp. 85-93, 1987 Copyright © 1987 Pergamon Journals Ltd. Printed in the USA 0736-5853•87 $3.00 + .00
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Ill-informed as Washington policy makers may be on matters scientific, they do have a role to play in getting the world to ISDN, and their decisions will influence how technologists go about that task. But public policy is not playing the central role in ISDN development. Indeed, when viewed in light of other factors, public policy seems to be playing a surprisingly small role.
ISDN Deployment Barriers Primarily Technical If the trade press is at all accurate, it would seem, at least to this writer, that these are the obstacles perceived as being the most serious current challenges to ISDN implementation: • Connecting most of the nation's lines to fully digital switching and transmission systems • Stemming the proliferation of private networks • Fostering greater compatibility between terminal systems • Overcoming the ravages of divestiture-getting U.S. standards-setting on an even keel, and overcoming counterproductive reactions to the loss of a single end-to-end service provider • Resolving the Europe-versus-North America, us-versus-them disagreements: harmonizing the "T"-versus-"U" interface business, figuring how to migrate North America's 56 kilobit circuits to 64 kilobit ones, and deciding on the proper way to transmit the basic r a t e - v i a echo cancellation or time compression multiplexing techniques These are technical obstacles to ISDN. They're touched upon, perhaps, by public policy, but are ones that are going to be resolved primarily in the scientific community. The point here is not to totally denigrate the role o f public policy in ISDN development efforts, but simply to put it in proper perspective. With that thought in mind, perhaps a quick look at what public policy forums in the United States are affecting ISDN development and deployment is in order.
FCC Preeminent U.S. Policy Making Forum The FCC, of course, is the nation's preeminent molder o f telecommunications regulatory policy. It's been such for the last 50 years, and is likely to continue to be for the next 50. Its charter, set by Congress, is relatively s t r a i g h t f o r w a r d - to preserve what is known as Universal Service, a concept that's proven itself quite resilient and abiding over the years. What's not so straightforward and simple to understand is the changing nature o f the Universal Service c o n c e p t - g o i n g beyond the realm o f P O T S - a n d the sudden shift to competition as the preferred mechanism with which to fulfill the Universal Service mandate. State regulatory p o l i c i e s - i f only by limiting the ability o f local exchange carriers (LECs) to modernize their plants and price out their s e r v i c e s - a r e likewise in a strong position to influence the speed of ISDN development. The U.S. Department of Justice is affecting ISDN implementation primarily through its delegated responsibility for administering the AT&T divestiture d e c r e e - o n e of the most important parts of which precludes 80 percent of the nation's LEC lines from serving as conduits for ISDN services.
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The Department o f Commerce is a sort of a perennial amicus curiae in U.S. federal telecommunications policy making. It's the White House's ear to the ground of the telecommunications industry. Likewise, the U.S. Trade Representative--the President's right-hand man on international t r a d e - i s becoming increasingly concerned with telecommunications, and is making telecom equipment and services the centerpieces of negotiations with other nations. And Congress, o f course, for the past half-century has kept an ever-watchful eye on telecommunications regulatory policy. On repeated occasions it has shown its ability to influence that policy via the mere hint of legislation. Just as engineers--at their own peril--have dismissed the Washington legal crowd because of its poor grasp of things technological, so too have self-confident FCC Commissioners i g n o r e d - a t their peril--what they considered to be poorly conceived Congressional gripes. Finally, the U.S. judiciary, which determines the legitimacy of the official acts of almost all the foregoing forums, and which, most recently, in a case involving the Louisianna Public Service Commission, showed its ability to strictly define the outer limits of the FCC's jurisdictional authority. Needless to say, one could ramble almost endlessly about the issues being addressed by each of these forums. The primary task at hand, however, is to focus on U.S. policy that's affecting ISDN. And that means the FCC's May 15, 1986, Computer III Order.
Computer II1: 'Good News and Bad' The May 15 Order is a classical case of: "I've got some good n e w s . . , and I've got some bad news." Whether the news is " g o o d " or " b a d " depends upon who the listener is. A telco -- particularly an AT&T-divested Bell operating company ( B O C ) - m a y
view it one way. Non-telco providers of communications capabilities may view it quite another way. The first bit o f n e w s - g o o d or bad, d e p e n d i n g - i s that the Order eliminates the now five-year-old structural separation rules that have precluded AT&T and the BOCs from providing basic, regulated services on an integrated basis with their enhanced, competitively provided services. The second bit of n e w s - a g a i n , bad or good, d e p e n d i n g - i s the prescription in the Order of so-called nonstructural safeguards: the quidpro quos with which AT&T and the BOCs must comply to escape the separate subsidiary rule. Examine for a moment the ramifications: The upside o f it a l l - for telcos and their s u b s c r i b e r s - is relatively obvious. It's going to allow the teicos to: integrate their resources, reduce their costs, hike their efficiencies, innovate with new services, lower their prices, raise d e m a n d - a n d , overall, up their profit potentials.
Nonstructural Safeguards Key to Computer III The downside, of course, is that telcos are going to have to comply with the newly developed and not-so-easy-to-comply-with nonstructural safeguards. Telcos are going to have to develop and implement approvable plans to make sure they d o n ' t - w i l l i n g l y or otherwise--unfairly leverage the technological knowledge they have of their networks in the development and offering of new network services. They're going to have to implement similar plans to make sure they don't unfairly
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exploit in enhanced services markets their knowledge of the calling and traffic patt e r n s - t h e so-called customer-proprietary network i n f o r m a t i o n - o f their regulated service subscribers. And they're going to have to allocate the costs of their plant and equipment that generate both regulated and unregulated services according to new, highly complicated, and, in fact, not-yet-developed accounting rules. F i n a l l y - a n d this gets to the heart of the nonstructural safeguards, indeed to the very heart of Computer III--telcos are going to have to immediately offer comparably efficient interconnection to other service vendors of the basic service elements that underlie t h e i r - t h e t e l c o s ' - e n h a n c e d service offerings; and come February l, 1988, the telcos (and AT&T, too) are going to have to file with the FCC Open Network Architecture plans. If ever there were an acronym with which U.S. telco officials should relate second naturedly, ONA is it! Before delving more deeply into that, though, a quick look at the likely implications of implementing these nonstructural safeguards is in order.
Competition in Services is FCC's Goal Without a doubt, implementation o f the nonstructural safeguards is going to boost demand for new kinds of telco access services, perhaps new points of access. And if the FCC has its way, they'll serve as a strong impetus for telcos to offer collocation. In essence, compliance with the new rules is going to force U.S. telcos to "invite" c o m p e t i t i o n - a t least for their enhanced, competitively provided services, and eventually, possibly, for their most rudimentary of regulated, basic services. That's the FCC's current agenda. The FCC sees all this fostering the development of still more new services outside the network, lower overall service p r i c e s - a n d , as a not-necessarily intended result, bolstered profit opportunities for non-telco service providers. The aim of the FCC's Computer III Order, in a nutshell, is to do for users of enhanced services what the Commission's Computer II rules have done for customerpremises equipment (CPE) consumers. All of which means that if successful, the Order will spell increasing numbers of players in enhanced-services markets, squeezed profit margins, and lots of risk! At the heart of the Computer III Order, of course, is ONA. First, the simple part: The BOCs and AT&T must file ONA Plans with the Commission bv February 1, 1988. The Commission is not going to directly take part in the formulation o f the Plans, but expects non-telco service providers to be fully involved in the process by which the Plans are prepared. The FCC will ultimately approve, disapprove, or modify the Plans, and this, almost certainly, will be followed by prolonged c h a l l e n g e s - b o t h at the FCC and in the courts. That's the easy part.
ONA a Policy Concept, NOT a Prescription Not too much more difficult to understand, though critically i m p o r t a n t - a n d repeated over and over by FCC officials since May 1 5 - is this: ONA is a public policy concept. It is not a prescription for any particular kind of network architecture. Also, there's little doubt the Commission would like to see a lot of conformity in the
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O N A Plans. But it isn't demanding i t - a n d , at least at this point, will probably be surprised if it gets anything close to conformity! As a matter o f necessity, this discussion must shift gears momentarily, and focus on the AT&T divestiture decree.
Divestiture Decree Does NOT Moot ONA Debate The decree, of course, thoroughly prevents BOCs from providing information services; and while "information services" may be a pretty imprecisely defined activity, there's little question but that it encompasses the rendering of communications capabilities of the kind envisioned as being provided by BOCs in a post-ONA, ISDN environment. So, given the information services proscription, aren't the Computer III Order and its O N A prescription relatively moot points? The answer, this writer submits, is "no," absolutely not. And that's because of what the Department o f J u s t i c e - t o which the overseeing court has entrusted stewardship of the d e c r e e - h a s said about O N A . Another reason to answer "no" might be on account of empirical economic evidence on which the Justice Department will be basing decree-alteration recommendations in 1987. To pursue this line of reasoning would be purely speculative at this point, however, and unnecessary. What's important to recognize is that ONA, after all, is the brainchild of the Department of Justice. The term first a r o s e - formally, at l e a s t - in Justice's comments to the FCC's original C o m p u t e r III Notice of Proposed Rule Making. And look what Justice said there: "[S]uch a change in network technology," said J u s t i c e - s p e a k i n g of this then-newfangled thing called open network a r c h i t e c t u r e - "even without the complete elimination of the bottleneck, may be the type of technological change that would warrant reconsideration of the prohibition on BOCs providing information services . . . " Lest there be any fear this Justice utterance was an isolated, overstated, or possibly misinterpreted one, look to what the then head of the Justice Department's antitrust division wrote shortly before: Until the BOCs lose their bottlenecks, wrote now-Court of Appeals Judge Douglas Ginsburg to U.S. Representative John Dingell, they should not be allowed out from under the information services ban . . . "unless the BOCs choose to develop an 'open architecture' within their networks to provide truly 'equal access' to rival information services providers. Insofar as the BOCs do provide such non-discriminatory access to their facilities, it may well be appropriate to consider whether they might be permitted
to provide certain types of information services." Then, in a speech to lawyers last December, Mr. Ginsburg repeated the point: If technology develops and is adopted that makes interconnections to the local switch for all information services providers truly transparent and equal, then the benefits of keeping the BOCs out of information service may no longer outweigh the costs.
The point should be clear: show the Justice Department that O N A is real, up-andrunning, and it will probably have few qualms about recommending elimination of the information services prohibition. O N A will spell its demise! So much for the MFJ hurdle. Now back to the guidelines that do exist for the yet-tobe-fashioned O N A plans.
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ONA Requires Unbundling and Resale The guidelines fall into four broad areas. The first is "unbundling and resale." Under this requirement, telcos must: • Develop an initial set of unbundled basic service elements ( B S E s ) - b u i l d i n g
b l o c k s - w i t h which others, like children playing with an Erector Set, can create a wide variety of enhanced services • Provide these BSEs on a tariffed basis • Use these BSEs in their own enhanced service offerings under the same terms and c o n d i t i o n s - and r a t e s - by which they're tariffed • Show that the BSEs were developed in conjunction with and consideration o f the needs of alternative service providers. CEI Rules S u b s u m e d by ONA Plan Guidelines
The second FCC-stated guideline for the ONA plans is that they comply with the Computer 111 Order comparably efficient interconnection requirements. The first point to make in this regard is that ONA plans that use the same interconnection facilities for carrier-provided enhanced services operations as for other enhanced service providers will be most favored by the FCC. Clearly, the Commission would like to see as much collocation as possible. Those that don't incorporate it in their plans will most definitely incur a heavier burden than those that do in demonstrating CEI compliance. Secondly, telcos must comply with an equal access standard. What this means is that the basic services used by a carrier-provided enhanced service must be made available to others on an unbundled basis, with technical specifications, functional capabilities, and other quality and operational characteristics, such as installation and maintenance times, equal to those provided the carrier's enhanced services. The equal access requirement also means that telcos must minimize the interconnection costs for other service providers, either by adopting collocation policies or by providing the most efficient means of concentrating traffic. Third, and as stated, telcos needn't provide collocation to other service providers. But they are urged to do so by the FCC to satisfy their general CEI responsibilities.
ONA Plans Must Meet CEI 'Technical Parameters' Fourth, and most important, telcos must comply with certain technicalparameters that the Commission has established for CEI. Under the rubric of this requirement come a number of things. First is interface functionality. Carriers must make available standardized hardware and software interfaces that are able to support transmission, switching, and signaling functions identical to those used in the enhanced service provided by the telco. For instance, if the telco uses trunk-side connections, then they (or their functional equivalents) should be made available to other service providers. The second requirement under the rubric of CEI technical parameters has to do with u n b u n d l i n g - a requirement similar to what was discussed above. In this section of the Order, however, the Commission throws out some telling examples. For one thing, it says that information used by a telco in providing unbundled basic services that is not c u s t o m e r - p r o p r i e t a r y - s u c h as calling-number i d e n t i f i c a t i o n - m u s t be made available as part of CEI. Also, any options available to such a telco likewise must be included in its unbundled
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offerings. For instance, if a carrier's enhanced service uses digital transmission, supervisory signaling, calling number identification, and a special alert s i g n a l - s u c h as a stutter dial t o n e - C E I for that service should include those basic services as a set unbundled from all other basic offerings. Thus, if a telco offers an option of a stutter dial tone or a signal to a visual indicator on the customer's C P E , CEI for that service would be required to provide such an option as well. Another important point in this regard: if the option that the telco has to provide cannot help but suffer some degradation, then it must charge its enhanced service operation a Network Utilization Rate Element. In essence, it must impose a penalty on itself. As stated, telcos must take the basic services that underlie their enhanced service offerings under the same rates and terms that they are offered to others. The technical characteristics of the telcos BSEs must be equal to those of the basic services that support its enhanced services. This is so for transmission parameters (e.g., bandwidth and bit rates); quality (e.g., bit error rate and delay distortions); and reliability (e.g., mean time between failures). Next under the rubric o f CEI parameters is the requirement that installation, maintenance, and repair of the basic services and facilities included in a CEI offering be the same as those the carrier provides to its own enhanced service operations. Next is end-user access. If the telco offers end-users the ability to use abbreviated dialing or signaling to activate or access its enhanced service offerings, it must provide, as part of its CEI offering, the same capabilities to end-users of all enhanced services that use the carrier's facilities. Similarly, end-users should have equal opportunities to access basic facilities through derived channels (e.g., via data-over-voice services), whether they use the enhanced service offerings o f the carrier or those of a competitor to do so. A telco's CEI offerings must be available, naturally, at least by the time it intends to be on-stream with its corresponding enhanced service. Also, the telco has got to give a reasonable amount of time for others to test the CEI offering. Importantly, telcos must show that they are providing others with interconnection facilities that minimize transport costs (e.g., via loop or trunk multiplexing, or by voluntarily adopted collocation policies). And finally under the rubric of CEI parameters, the telcos may not restrict the availability of CEI or BSEs to any class of customer or enhanced service competitor. The third aspect of the Commission's O N A guidelines has to do with the development of the plans. The Commission expects that they will be developed in public forums, and that the opportunity for involvement in their development will be totally free and open. And the last aspect of the guidelines merely reiterates that the plans to be filed by 2-188 must list their initial sets o f BSEs, and describe their compliance with the above requirements. Once received, the Commission will solicit comments on the plans, and then rule on them. Then, of course, will come the appeals.
ONA Outlook Hazy Nobody yet knows what O N A is, and none of the technical or policy "insiders" this writer knows are confident they'll recognize it when they run into it. ISDN planners would do well to heed the FCC's repeated admonition, nonetheless,
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and that's to recognize that O N A is a public policy concept. It is not a prescription for any particular kind of network architecture. Technologists should beware, however, the O N A "naysayer." They should beware, that is, those saying that acceptable O N A plans will be mere enumerations of Basic Service Elements. The requirement that the O N A plans conform to CEI parameters adds a significant technological bent to the subject.
ONA Bugaboo: D Channel Access Are there specific problems with the O N A concept insofar as ISDN is concerned? In a word, yes. And it seems to have to do with use of the D channel. The Commission sees the D channel as being a signaling channel, a tool for controlling use of the B channels. At the same time, it recognizes that carriers are capable of accessing their D channels for the transport of packetized data. The issue presented by all this is whether to close the D channel for exclusive carrier usage. IBM says "no." It says the telcos should be required to install "D-channel handlers" in their offices to separate signaling packets from information packets and route the information packets to customer-selected enhanced services vendors. Most of the LECs disagree, although a few seem to envision some sort of opening of the D channel. The FCC, importantly, says it's too early to judge the i s s u e - a n d further, that it should be resolved in public standard-setting forums. But, warns the FCC, if a telco does use the D channel other than for pure signaling purposes, then the CEI requirements of the Computer III Order may be triggered. So much for the D channel. It's time to shift mental gears again, and to zero on another regulatory area impacting ISDN deployment: pricing.
Alternative Services will Color ISDN Pricing The biggest factor impacting the U.S. pricing or tariffing of ISDN s e r v i c e s - a n d all communications services, for that m a t t e r - is the proliferating smorgasbord of options available to U.S. consumers of communications capabilities. The list goes on and on, and grows each day. If a user doesn't want switched access lines, he can opt for dedicated ones. If he doesn't want private lines, he can b u i l d - o r l e a s e - m i c r o w a v e or fiber links. If he doesn't want network digital services for his data, he can buy a modem. And if he doesn't like Centrex, he can buy a PBX. And on and on! There's a virtually endless list of options from which users can choose in satisfying their communications needs. The argument has been made, and is worth noting in this regard, t h a t - w i t h the possible exception of what one might consider some rather esoteric capabilities, such as user-to-user s i g n a l i n g - t h e r e are no ISDN services being ballyhooed today that are not deliverable to users by means other than ISDN circuits. Thus, ISDN services--to the extent they're nontraffic-sensitive-are going to have to be priced on something coming very close to a flat rate basis. The greater the deviation from this rule, then the greater the likelihood U.S. users will turn to alternative (more cost-based) means of satisfying their needs. Likewise with U.S. access charges. Until the price of access is brought roughly in line
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with its underlying cost, the more attractive alternative forms of access are going to continue to be.
ONA: Reigning Star of Public Policy Debates To this writer's regret, the foregoing probably has not done what would be most desirable: to provide great insight into ONA. Nonetheless, some of the points raised h e r e i n - a x i o m a t i c as they may b e - s h o u l d be helpful in assessing the impact U.S. regulatory policy is having on ISDN development and deployment: •
•
• • •
• • •
User-responsive application of technology is the engine of the ISDN-development process. Standards-setting and public policy are important areas of activity, but they're playing mere supporting roles in the unfolding ISDN drama. The star is technology. The divestiture decree is a roadblock to fullfledged ISDN implementation in the U.S., but won't be forever, and may not be for much longer at all. The FCC is but one of several U.S. policy forums affecting ISDN developments, but it's the preeminent one, and is going to continue to be. U.S. courts, notwithstanding the recent Louisiana PSC case, are going to back the FCC's authority to rule in areas important to ISDN development. On the offchance they don't, Congress will. It'll change the law if it has to. D-channel access is an open question, but it will be r e s o l v e d - maybe by means of a negotiated settlement in a public forum, but maybe, too, in the marketplace. ISDN pricing will be constrained by its t r a f f i c - s e n s i t i v i t y - o r lack t h e r e o f - a n d the continuing and growing availability of alternate services. And ONA. It's the reigning star of today's telecommunications public policy show. To the extent policy affects ISDN development and deployment at all, it is going to be this c o n c e p t - O N A - - t h a t leads the way.
U.S. POLICY MAKERS READYING FOR ISDN's ADVENT Robert G. Rogers The advent of integrated services digital networks (ISDN) is bringing with it some thorny challenges to Washington, D.C.; and a lot of the policy makers in this capital c i t y - i n the folksy parlance of U.S. politics-are heading for the tall grass! What seems to be so intimidating to U.S. policy makers is that ISDN is putting aside 50 years of conventional thinking about the technical details of the nation's telecommunications infrastructure. Also intimidating to the policy makers is their difficulty in communicating with ISDN visionaries. The stock in trade of the ISDN crowd, after all, is numbers, equations, things scientific. The stock in trade of policy makers is words. If all this sounds a bit overly disparaging, it's intended. It's intended to make the point that public p o l i c y - t h e traditional province of lawyers, economists, and assorted other wordsmiths- is but one of three areas of activity affecting ISDN.
Technology is "Engine" of ISDN Development Driving the ISDN development process-its real e n g i n e - i s technology, or more accurately, the user-responsive application of technology. Standards-setting is a second activity steering the world to ISDN. It differs from the public policy making process only inasmuch as its participants are primarily engineers. Public policy making, like standard-setting, is playing but a supporting role in the drama of ISDN development. The lead role, though, is being played by technology: the user-responsive application of digital electronics, fiber optics, microcircuitry, and software. It's a mistake for Washington policy makers to think that the evolution of I S D N - o r the more popularly touted Information A g e - i s totally in their hands. Likewise, it's a mistake for technologists to be intimidated by the jargon of the Washington crowd or by its bureaucratic procedures. Technologists should beware, nonetheless, of those colleagues of theirs who dismiss public policy makers as harmless lawyers who know little of technology.
Robert Rogers is director, regulatory affairs for Northern Telecom Inc., in Washington, D.C.
TELEMATICS end INFORMATICS
Vol. 4, No. 1, pp. 85-93, 1987 Copyright © 1987 Pergamon Journals Ltd. Printed in the USA 0736-5853•87 $3.00 + .00
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Ill-informed as Washington policy makers may be on matters scientific, they do have a role to play in getting the world to ISDN, and their decisions will influence how technologists go about that task. But public policy is not playing the central role in ISDN development. Indeed, when viewed in light of other factors, public policy seems to be playing a surprisingly small role.
ISDN Deployment Barriers Primarily Technical If the trade press is at all accurate, it would seem, at least to this writer, that these are the obstacles perceived as being the most serious current challenges to ISDN implementation: • Connecting most of the nation's lines to fully digital switching and transmission systems • Stemming the proliferation of private networks • Fostering greater compatibility between terminal systems • Overcoming the ravages of divestiture-getting U.S. standards-setting on an even keel, and overcoming counterproductive reactions to the loss of a single end-to-end service provider • Resolving the Europe-versus-North America, us-versus-them disagreements: harmonizing the "T"-versus-"U" interface business, figuring how to migrate North America's 56 kilobit circuits to 64 kilobit ones, and deciding on the proper way to transmit the basic r a t e - v i a echo cancellation or time compression multiplexing techniques These are technical obstacles to ISDN. They're touched upon, perhaps, by public policy, but are ones that are going to be resolved primarily in the scientific community. The point here is not to totally denigrate the role o f public policy in ISDN development efforts, but simply to put it in proper perspective. With that thought in mind, perhaps a quick look at what public policy forums in the United States are affecting ISDN development and deployment is in order.
FCC Preeminent U.S. Policy Making Forum The FCC, of course, is the nation's preeminent molder o f telecommunications regulatory policy. It's been such for the last 50 years, and is likely to continue to be for the next 50. Its charter, set by Congress, is relatively s t r a i g h t f o r w a r d - to preserve what is known as Universal Service, a concept that's proven itself quite resilient and abiding over the years. What's not so straightforward and simple to understand is the changing nature o f the Universal Service c o n c e p t - g o i n g beyond the realm o f P O T S - a n d the sudden shift to competition as the preferred mechanism with which to fulfill the Universal Service mandate. State regulatory p o l i c i e s - i f only by limiting the ability o f local exchange carriers (LECs) to modernize their plants and price out their s e r v i c e s - a r e likewise in a strong position to influence the speed of ISDN development. The U.S. Department of Justice is affecting ISDN implementation primarily through its delegated responsibility for administering the AT&T divestiture d e c r e e - o n e of the most important parts of which precludes 80 percent of the nation's LEC lines from serving as conduits for ISDN services.
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The Department o f Commerce is a sort of a perennial amicus curiae in U.S. federal telecommunications policy making. It's the White House's ear to the ground of the telecommunications industry. Likewise, the U.S. Trade Representative--the President's right-hand man on international t r a d e - i s becoming increasingly concerned with telecommunications, and is making telecom equipment and services the centerpieces of negotiations with other nations. And Congress, o f course, for the past half-century has kept an ever-watchful eye on telecommunications regulatory policy. On repeated occasions it has shown its ability to influence that policy via the mere hint of legislation. Just as engineers--at their own peril--have dismissed the Washington legal crowd because of its poor grasp of things technological, so too have self-confident FCC Commissioners i g n o r e d - a t their peril--what they considered to be poorly conceived Congressional gripes. Finally, the U.S. judiciary, which determines the legitimacy of the official acts of almost all the foregoing forums, and which, most recently, in a case involving the Louisianna Public Service Commission, showed its ability to strictly define the outer limits of the FCC's jurisdictional authority. Needless to say, one could ramble almost endlessly about the issues being addressed by each of these forums. The primary task at hand, however, is to focus on U.S. policy that's affecting ISDN. And that means the FCC's May 15, 1986, Computer III Order.
Computer II1: 'Good News and Bad' The May 15 Order is a classical case of: "I've got some good n e w s . . , and I've got some bad news." Whether the news is " g o o d " or " b a d " depends upon who the listener is. A telco -- particularly an AT&T-divested Bell operating company ( B O C ) - m a y
view it one way. Non-telco providers of communications capabilities may view it quite another way. The first bit o f n e w s - g o o d or bad, d e p e n d i n g - i s that the Order eliminates the now five-year-old structural separation rules that have precluded AT&T and the BOCs from providing basic, regulated services on an integrated basis with their enhanced, competitively provided services. The second bit of n e w s - a g a i n , bad or good, d e p e n d i n g - i s the prescription in the Order of so-called nonstructural safeguards: the quidpro quos with which AT&T and the BOCs must comply to escape the separate subsidiary rule. Examine for a moment the ramifications: The upside o f it a l l - for telcos and their s u b s c r i b e r s - is relatively obvious. It's going to allow the teicos to: integrate their resources, reduce their costs, hike their efficiencies, innovate with new services, lower their prices, raise d e m a n d - a n d , overall, up their profit potentials.
Nonstructural Safeguards Key to Computer III The downside, of course, is that telcos are going to have to comply with the newly developed and not-so-easy-to-comply-with nonstructural safeguards. Telcos are going to have to develop and implement approvable plans to make sure they d o n ' t - w i l l i n g l y or otherwise--unfairly leverage the technological knowledge they have of their networks in the development and offering of new network services. They're going to have to implement similar plans to make sure they don't unfairly
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exploit in enhanced services markets their knowledge of the calling and traffic patt e r n s - t h e so-called customer-proprietary network i n f o r m a t i o n - o f their regulated service subscribers. And they're going to have to allocate the costs of their plant and equipment that generate both regulated and unregulated services according to new, highly complicated, and, in fact, not-yet-developed accounting rules. F i n a l l y - a n d this gets to the heart of the nonstructural safeguards, indeed to the very heart of Computer III--telcos are going to have to immediately offer comparably efficient interconnection to other service vendors of the basic service elements that underlie t h e i r - t h e t e l c o s ' - e n h a n c e d service offerings; and come February l, 1988, the telcos (and AT&T, too) are going to have to file with the FCC Open Network Architecture plans. If ever there were an acronym with which U.S. telco officials should relate second naturedly, ONA is it! Before delving more deeply into that, though, a quick look at the likely implications of implementing these nonstructural safeguards is in order.
Competition in Services is FCC's Goal Without a doubt, implementation o f the nonstructural safeguards is going to boost demand for new kinds of telco access services, perhaps new points of access. And if the FCC has its way, they'll serve as a strong impetus for telcos to offer collocation. In essence, compliance with the new rules is going to force U.S. telcos to "invite" c o m p e t i t i o n - a t least for their enhanced, competitively provided services, and eventually, possibly, for their most rudimentary of regulated, basic services. That's the FCC's current agenda. The FCC sees all this fostering the development of still more new services outside the network, lower overall service p r i c e s - a n d , as a not-necessarily intended result, bolstered profit opportunities for non-telco service providers. The aim of the FCC's Computer III Order, in a nutshell, is to do for users of enhanced services what the Commission's Computer II rules have done for customerpremises equipment (CPE) consumers. All of which means that if successful, the Order will spell increasing numbers of players in enhanced-services markets, squeezed profit margins, and lots of risk! At the heart of the Computer III Order, of course, is ONA. First, the simple part: The BOCs and AT&T must file ONA Plans with the Commission bv February 1, 1988. The Commission is not going to directly take part in the formulation o f the Plans, but expects non-telco service providers to be fully involved in the process by which the Plans are prepared. The FCC will ultimately approve, disapprove, or modify the Plans, and this, almost certainly, will be followed by prolonged c h a l l e n g e s - b o t h at the FCC and in the courts. That's the easy part.
ONA a Policy Concept, NOT a Prescription Not too much more difficult to understand, though critically i m p o r t a n t - a n d repeated over and over by FCC officials since May 1 5 - is this: ONA is a public policy concept. It is not a prescription for any particular kind of network architecture. Also, there's little doubt the Commission would like to see a lot of conformity in the
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O N A Plans. But it isn't demanding i t - a n d , at least at this point, will probably be surprised if it gets anything close to conformity! As a matter o f necessity, this discussion must shift gears momentarily, and focus on the AT&T divestiture decree.
Divestiture Decree Does NOT Moot ONA Debate The decree, of course, thoroughly prevents BOCs from providing information services; and while "information services" may be a pretty imprecisely defined activity, there's little question but that it encompasses the rendering of communications capabilities of the kind envisioned as being provided by BOCs in a post-ONA, ISDN environment. So, given the information services proscription, aren't the Computer III Order and its O N A prescription relatively moot points? The answer, this writer submits, is "no," absolutely not. And that's because of what the Department o f J u s t i c e - t o which the overseeing court has entrusted stewardship of the d e c r e e - h a s said about O N A . Another reason to answer "no" might be on account of empirical economic evidence on which the Justice Department will be basing decree-alteration recommendations in 1987. To pursue this line of reasoning would be purely speculative at this point, however, and unnecessary. What's important to recognize is that ONA, after all, is the brainchild of the Department of Justice. The term first a r o s e - formally, at l e a s t - in Justice's comments to the FCC's original C o m p u t e r III Notice of Proposed Rule Making. And look what Justice said there: "[S]uch a change in network technology," said J u s t i c e - s p e a k i n g of this then-newfangled thing called open network a r c h i t e c t u r e - "even without the complete elimination of the bottleneck, may be the type of technological change that would warrant reconsideration of the prohibition on BOCs providing information services . . . " Lest there be any fear this Justice utterance was an isolated, overstated, or possibly misinterpreted one, look to what the then head of the Justice Department's antitrust division wrote shortly before: Until the BOCs lose their bottlenecks, wrote now-Court of Appeals Judge Douglas Ginsburg to U.S. Representative John Dingell, they should not be allowed out from under the information services ban . . . "unless the BOCs choose to develop an 'open architecture' within their networks to provide truly 'equal access' to rival information services providers. Insofar as the BOCs do provide such non-discriminatory access to their facilities, it may well be appropriate to consider whether they might be permitted
to provide certain types of information services." Then, in a speech to lawyers last December, Mr. Ginsburg repeated the point: If technology develops and is adopted that makes interconnections to the local switch for all information services providers truly transparent and equal, then the benefits of keeping the BOCs out of information service may no longer outweigh the costs.
The point should be clear: show the Justice Department that O N A is real, up-andrunning, and it will probably have few qualms about recommending elimination of the information services prohibition. O N A will spell its demise! So much for the MFJ hurdle. Now back to the guidelines that do exist for the yet-tobe-fashioned O N A plans.
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ONA Requires Unbundling and Resale The guidelines fall into four broad areas. The first is "unbundling and resale." Under this requirement, telcos must: • Develop an initial set of unbundled basic service elements ( B S E s ) - b u i l d i n g
b l o c k s - w i t h which others, like children playing with an Erector Set, can create a wide variety of enhanced services • Provide these BSEs on a tariffed basis • Use these BSEs in their own enhanced service offerings under the same terms and c o n d i t i o n s - and r a t e s - by which they're tariffed • Show that the BSEs were developed in conjunction with and consideration o f the needs of alternative service providers. CEI Rules S u b s u m e d by ONA Plan Guidelines
The second FCC-stated guideline for the ONA plans is that they comply with the Computer 111 Order comparably efficient interconnection requirements. The first point to make in this regard is that ONA plans that use the same interconnection facilities for carrier-provided enhanced services operations as for other enhanced service providers will be most favored by the FCC. Clearly, the Commission would like to see as much collocation as possible. Those that don't incorporate it in their plans will most definitely incur a heavier burden than those that do in demonstrating CEI compliance. Secondly, telcos must comply with an equal access standard. What this means is that the basic services used by a carrier-provided enhanced service must be made available to others on an unbundled basis, with technical specifications, functional capabilities, and other quality and operational characteristics, such as installation and maintenance times, equal to those provided the carrier's enhanced services. The equal access requirement also means that telcos must minimize the interconnection costs for other service providers, either by adopting collocation policies or by providing the most efficient means of concentrating traffic. Third, and as stated, telcos needn't provide collocation to other service providers. But they are urged to do so by the FCC to satisfy their general CEI responsibilities.
ONA Plans Must Meet CEI 'Technical Parameters' Fourth, and most important, telcos must comply with certain technicalparameters that the Commission has established for CEI. Under the rubric of this requirement come a number of things. First is interface functionality. Carriers must make available standardized hardware and software interfaces that are able to support transmission, switching, and signaling functions identical to those used in the enhanced service provided by the telco. For instance, if the telco uses trunk-side connections, then they (or their functional equivalents) should be made available to other service providers. The second requirement under the rubric of CEI technical parameters has to do with u n b u n d l i n g - a requirement similar to what was discussed above. In this section of the Order, however, the Commission throws out some telling examples. For one thing, it says that information used by a telco in providing unbundled basic services that is not c u s t o m e r - p r o p r i e t a r y - s u c h as calling-number i d e n t i f i c a t i o n - m u s t be made available as part of CEI. Also, any options available to such a telco likewise must be included in its unbundled
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offerings. For instance, if a carrier's enhanced service uses digital transmission, supervisory signaling, calling number identification, and a special alert s i g n a l - s u c h as a stutter dial t o n e - C E I for that service should include those basic services as a set unbundled from all other basic offerings. Thus, if a telco offers an option of a stutter dial tone or a signal to a visual indicator on the customer's C P E , CEI for that service would be required to provide such an option as well. Another important point in this regard: if the option that the telco has to provide cannot help but suffer some degradation, then it must charge its enhanced service operation a Network Utilization Rate Element. In essence, it must impose a penalty on itself. As stated, telcos must take the basic services that underlie their enhanced service offerings under the same rates and terms that they are offered to others. The technical characteristics of the telcos BSEs must be equal to those of the basic services that support its enhanced services. This is so for transmission parameters (e.g., bandwidth and bit rates); quality (e.g., bit error rate and delay distortions); and reliability (e.g., mean time between failures). Next under the rubric o f CEI parameters is the requirement that installation, maintenance, and repair of the basic services and facilities included in a CEI offering be the same as those the carrier provides to its own enhanced service operations. Next is end-user access. If the telco offers end-users the ability to use abbreviated dialing or signaling to activate or access its enhanced service offerings, it must provide, as part of its CEI offering, the same capabilities to end-users of all enhanced services that use the carrier's facilities. Similarly, end-users should have equal opportunities to access basic facilities through derived channels (e.g., via data-over-voice services), whether they use the enhanced service offerings o f the carrier or those of a competitor to do so. A telco's CEI offerings must be available, naturally, at least by the time it intends to be on-stream with its corresponding enhanced service. Also, the telco has got to give a reasonable amount of time for others to test the CEI offering. Importantly, telcos must show that they are providing others with interconnection facilities that minimize transport costs (e.g., via loop or trunk multiplexing, or by voluntarily adopted collocation policies). And finally under the rubric of CEI parameters, the telcos may not restrict the availability of CEI or BSEs to any class of customer or enhanced service competitor. The third aspect of the Commission's O N A guidelines has to do with the development of the plans. The Commission expects that they will be developed in public forums, and that the opportunity for involvement in their development will be totally free and open. And the last aspect of the guidelines merely reiterates that the plans to be filed by 2-188 must list their initial sets o f BSEs, and describe their compliance with the above requirements. Once received, the Commission will solicit comments on the plans, and then rule on them. Then, of course, will come the appeals.
ONA Outlook Hazy Nobody yet knows what O N A is, and none of the technical or policy "insiders" this writer knows are confident they'll recognize it when they run into it. ISDN planners would do well to heed the FCC's repeated admonition, nonetheless,
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and that's to recognize that O N A is a public policy concept. It is not a prescription for any particular kind of network architecture. Technologists should beware, however, the O N A "naysayer." They should beware, that is, those saying that acceptable O N A plans will be mere enumerations of Basic Service Elements. The requirement that the O N A plans conform to CEI parameters adds a significant technological bent to the subject.
ONA Bugaboo: D Channel Access Are there specific problems with the O N A concept insofar as ISDN is concerned? In a word, yes. And it seems to have to do with use of the D channel. The Commission sees the D channel as being a signaling channel, a tool for controlling use of the B channels. At the same time, it recognizes that carriers are capable of accessing their D channels for the transport of packetized data. The issue presented by all this is whether to close the D channel for exclusive carrier usage. IBM says "no." It says the telcos should be required to install "D-channel handlers" in their offices to separate signaling packets from information packets and route the information packets to customer-selected enhanced services vendors. Most of the LECs disagree, although a few seem to envision some sort of opening of the D channel. The FCC, importantly, says it's too early to judge the i s s u e - a n d further, that it should be resolved in public standard-setting forums. But, warns the FCC, if a telco does use the D channel other than for pure signaling purposes, then the CEI requirements of the Computer III Order may be triggered. So much for the D channel. It's time to shift mental gears again, and to zero on another regulatory area impacting ISDN deployment: pricing.
Alternative Services will Color ISDN Pricing The biggest factor impacting the U.S. pricing or tariffing of ISDN s e r v i c e s - a n d all communications services, for that m a t t e r - is the proliferating smorgasbord of options available to U.S. consumers of communications capabilities. The list goes on and on, and grows each day. If a user doesn't want switched access lines, he can opt for dedicated ones. If he doesn't want private lines, he can b u i l d - o r l e a s e - m i c r o w a v e or fiber links. If he doesn't want network digital services for his data, he can buy a modem. And if he doesn't like Centrex, he can buy a PBX. And on and on! There's a virtually endless list of options from which users can choose in satisfying their communications needs. The argument has been made, and is worth noting in this regard, t h a t - w i t h the possible exception of what one might consider some rather esoteric capabilities, such as user-to-user s i g n a l i n g - t h e r e are no ISDN services being ballyhooed today that are not deliverable to users by means other than ISDN circuits. Thus, ISDN services--to the extent they're nontraffic-sensitive-are going to have to be priced on something coming very close to a flat rate basis. The greater the deviation from this rule, then the greater the likelihood U.S. users will turn to alternative (more cost-based) means of satisfying their needs. Likewise with U.S. access charges. Until the price of access is brought roughly in line
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with its underlying cost, the more attractive alternative forms of access are going to continue to be.
ONA: Reigning Star of Public Policy Debates To this writer's regret, the foregoing probably has not done what would be most desirable: to provide great insight into ONA. Nonetheless, some of the points raised h e r e i n - a x i o m a t i c as they may b e - s h o u l d be helpful in assessing the impact U.S. regulatory policy is having on ISDN development and deployment: •
•
• • •
• • •
User-responsive application of technology is the engine of the ISDN-development process. Standards-setting and public policy are important areas of activity, but they're playing mere supporting roles in the unfolding ISDN drama. The star is technology. The divestiture decree is a roadblock to fullfledged ISDN implementation in the U.S., but won't be forever, and may not be for much longer at all. The FCC is but one of several U.S. policy forums affecting ISDN developments, but it's the preeminent one, and is going to continue to be. U.S. courts, notwithstanding the recent Louisiana PSC case, are going to back the FCC's authority to rule in areas important to ISDN development. On the offchance they don't, Congress will. It'll change the law if it has to. D-channel access is an open question, but it will be r e s o l v e d - maybe by means of a negotiated settlement in a public forum, but maybe, too, in the marketplace. ISDN pricing will be constrained by its t r a f f i c - s e n s i t i v i t y - o r lack t h e r e o f - a n d the continuing and growing availability of alternate services. And ONA. It's the reigning star of today's telecommunications public policy show. To the extent policy affects ISDN development and deployment at all, it is going to be this c o n c e p t - O N A - - t h a t leads the way.