Thursday, April 15, 2010

The Myth of the Myth of Title II Reclassification

Well, finally, the telecom name game hits the big time. Having cross examined no end of Bell company witnesses, I'll examine George Ou's apparently pro-ILEC spin by juxtaposing his apparent "analysis" against the whole of the Internet. (I say "pro-ILEC" (aka pro-Bellco) because it appears Digital Society is a half-way house for Progress and Freedom Foundation (who routinely supports "deregulation" of the AT&T and Verizon variety) judging by their personnel:

Ou takes issue with the proposition the FCC should regulate the transport components of the Internet in a short article entitled "The Myth of Title II `reclassification'". He refers to some FCC orders without naming them and then sets up and proves a straw man argument. Setting aside a certain lack of legal depth, his analysis also fails to account for industry history, evolution of the networks, interconnection arrangements (uh, across every platform - cable, wireless, wireline, satellite, and so on), tariffs, facilities, towers, or money behind them, much less the practicalities of actually running these business or litigating the cases he seems to cite with such confidence. Rather than dive into briefing this - b/c thorough treatment would require briefing, why don't we just examine the facts. Secondly, he was a network engineer, now reporter, not a lawyer. So to keep this fair, I'll take off my lawyer hat - and go right into the deep end of the network stuff to illustrate how, on the facts alone, this kind of reasoning is ludicrous.

First, let's not get lost in the name game:

If we run it to the lowest common denominator – the signals travelling across coaxial cable, hybrid coax, copper, fiber optic, TDM, mobile wireless, fixed wireless, handsets of every stripe, CDMA, GSM, LTE, 4G, satellite, class V switches, class VI switches, cable head ends, CDNs, etc. – we know that electronic communications networks – however labeled (Internet, Public Switched Network, cable, broadcast, etc.) involve people using computers to communicate with each other. Computers process "information". Information, to a computer, exists in one of two states: on or off. Your 2 gigahertz computer processor, for example, is a switch that essentially turns on or off 2 billion times per second. So it all boils down to 010010001010100101010101010s (and programming and money, but hey, let's see what's really going on underneath the name game).

Setting aside gaping holes in the applicable legal history, which, again, we don't need to address here as the facts, I think, are delicious, let's just see how that plays out against all of the "transport" and "information" distinctions the article asserts are so utterly clear.

  • Some of the 010101010110110101s are "transport" and some of the 010101011101010101101s are "information" because some of the 010111010010101s ride "on top of" some of the other 101010101011011s.
  • Some of the 010101011010101s are "out of band" but part of "telecommunications" (SS7 is an IP network), but not exempted from Title II, but not quite Title II either (some tariffed SS7, others didn't tariff SS7; no one could decide).
  • Others 0101010101s through the air and are "local" (and no subject to state regulation) more often than ones that go through copper or coax, which are also "local" but subject to state regulation (and pricing inputs that on average are 20x higher than those that apply when they go through the air). This only happens, however, when those 01010101011s are "voice"; if not, then other rules may (or may not) apply, as demonstrated with pellucid clarity below.
  • Yet other 01010101001010s are on copper or coax but are not telecommunications (because not only to they ride over, but are "combined with" some 1010101010101110101s beneath them that results in the copper being not regulated). But, if you happen to be a 10101010101010 that is associated with "voice", you are subject to regulation (under Title I), including but not limited to USF and 911, when your 101010101010s ride "over" other 101010101s that were already combined with the lower layer 1010000010101s that resulted in the deregulated copper in the first place. This is entirely different than the problem mentioned above where certain 0101010101s were subject or not subject to state regulation when they carried voice. In this case the 1010101s were in "IP" format. Above, they were in CDMA or GSM (or LTE or 4G) or TDM or DOCSIS, but not necessarily in IP, though they might have been IP at some point, however, so long as it was something other than IP at the endpoints, the rules cited above would apply, not the rules referenced in the 10010101s mentioned in this paragraph.
  • The preceding paragraph was probably confusing; I'll clarify: 00101010110011s that originate in a form of 01010101011s known as time division multiplexing, are converted to other 0101010s that are known as IP, then back to 10110101011s known as time division multiplexing are regulated. This would also more or less be true if CDMA or GSM were on both ends, but no one has really fought that legal battle because the financial rules that apply to 0101010101s carrying voice to your CDMA, GSM, 4G or LTE handset are subject to financial rules (known as "intercarrier compensation") that make it silly to fight over whether or not the 1010101s really actually truly "originated" and "terminated" in something other than IP. The real battle over 101010101110s that ride inside of 1010101010 formatting known as CDMA, GSM, 4G or LTE comes not for rating reasons, but because either the handset vendor (e.g. Apple) or the entity that provides the CDMA, GSM, 4G or LTE signal (wireless "carrier") wants to prevent you, consumer, from using the Internet to carry some of your 1010100101 voice signals via cheaper providers available on the Internet.

We're not done yet; it gets better:

  • Certain 1010100101s ride inside waves, but only in one direction. They are neither telecom nor information service because they carry video and go only in one direction.
  • Other 10101010101s ride inside waves, generally in one direction (subject to error checking). They are not broadcast, could be telecom but are information service as they are inside of fiber optic glass, carry video, but come from web servers not broadcast studios.

Secondly, let's just take one real world example:

Somehow the incumbents, and apparently Mr. Ou say Title II never applied to the "Internet". Well maybe ... they are hyper-technically correct. But, again, to avoid confusion, recall that certain special rules apply to certain 1010101s that carry voice information. Sometimes people use the Internet to communicate by voice. Sometimes they talk to other people who use computers to connect to the Internet. Sometimes, however, their friends are away from their computers. So they call the telephones. In that case 1010010101s go from a computer to other computers that "convert" the 10101010s from IP to other formats - whether TDM, CDMA, GSM, etc. In some cases the 101010101s from your computer will have other numbers associated with them - a telephone number - let's say you buy Vonage in Washington, DC (202 area code). You move to San Francisco (415 area code). You take your vonage phone with you. You call your grandmother, across the street. Your grandmother buys old fashioned telephone service from AT&T. You buy DSL service from AT&T. AT&T will charge the carrier who takes your 101010101s from the "Internet" (IP format) and converts those to 101010101s that can talk to it's old fashioned telephone switches (TDM format - this is old copper landline) "long distance" fees. But you can only charge "long distance" if you apply a tariff (tariffs are creatures of Title II) to that call.

The money in these charges is several tens of billions of dollars per year. AT&T, Qwest, Verizon, Windstream, Embarq now CenturyLink, etc. has sued all kinds of carriers who convert 1010101s from IP format to 01010101s in TDM format to connect with their old fashioned switches and won hundreds of millions of dollars. At the same time these carriers use IP in their backbones, deploy all sorts of IP-enabled gear, but use their old TDM operations as cash registers to clean out everyone but themselves. Go figure.

So of course Title II has never been applied to the Internet. "Reclassification is a myth." OK. Sure. Clear as day.

Fortunately for us, AT&T, Verizon, Qwest, Windstream, CenturyLink, and apparently the good people at Digital Society, want to keep the system just the way it is right now. Mmmmm. Glad the "free market" guys are completely in alignment with all of the "free market" incumbents who want to make sure that selective deregulation stays in place.


  1. There is no such thing as "deregulation" or "free markets". There are only customer-regulated markets and government-regulated markets. Obviously you prefer one or the other if you think one kind of regulation generates better results than the other kind of regulation.

    Are we clear? The only possibility of "deregulation" would be if government regulates neutrally, favoring neither customer nor business, and somehow manages to control the customer so that they have no choice of business.

  2. That's not at all clear. The last sentence makes no sense whatsoever. It isn't a question of "no regulation" or regulation. It's a question of the right regulation.