SBC Files Tariff with FCC on Service for VOIP Providers

November 26, 2004. SBC's Southwestern Bell Telephone Company (SWBT) filed a tariff with the Federal Communications Commission (FCC) on Wednesday evening, November 24, 2004. The tariff pertains to SBC's service for voice over internet protocol (VOIP) service providers that it has named "TIPToP", a partial acronym for "True Internet Protocol To Public Switched Telephone Network". It is now a voluntary service. VOIP providers need not purchase it to access SBC's customers on the Public Switched Telephone Network (PSTN).

On Friday, November 26, the day after Thanksgiving, FCC Chairman Michael Powell wrote in a statement [PDF] that he is committed to ensuring that the FCC avoid "any action that might slow the IP-services revolution".

Powell (at right) warned that "Should we conclude that this tariff is being used to justify the imposition of traditional tariffed access charges on VoIP providers or to discriminate against SBC's competitors, the Commission will take appropriate action including, but not limited to, initiating an investigation of SBC's interstate tariff and any other tariff that proposes similar terms. Nothing in this tariff should be interpreted to force a set of compensation relationships on VoIP providers and their connecting carriers either at this Commission or in other venues."

Background on Tariffs, Common Carriers, Information Services, and Intercarrier Compensation.

Tariffs are "Schedules of rates and regulations filed by common carriers" See, 47 CFR 61.3(rr). Tariffs are filed either with state public utilities commissions or the FCC, depending on jurisdiction. Moreover, these common carriers are required to some extent to adhere to their tariffs. Regulators can challenge these tariffs.

The filing of interstate tariffs is covered Part 61 of the FCC's rules. See, GPO page with hyperlinks to each of the sections of part 61 in PDF.

The regulatory regime based upon tariffing dates back to government efforts to curtail certain business practices in the railroad industry in the 19th Century. It was then transplanted to the monopoly phone industry early in the 20th Century. It is based on the assumption that in industries with concentrated market power, markets and negotiation of contacts do not protect consumer welfare, and that government must therefore regulate prices, and prevent price discrimination.

Tariff filing is a procedure that applies in the context of old regulated telecommunications services, but not new unregulated information services, where there are no dominant incumbents with market power.

The FCC has already issued a Declaratory Ruling that Pulver.com's VOIP service, named Free World Dialup, is an information service, and not a telecommunications service. See, Declaratory Ruling and story titled "FCC Rules on Pulver's Free World Dialup VOIP Service" in TLJ Daily E-Mail Alert No. 836, February 13, 2004.

The FCC has also released a Memorandum Opinion and Order [41 pages in PDF] that addresses Vonage Holdings Corporation's Petition for Declaratory Ruling regarding its DigitalVoice service in the state of Minnesota. Minnesota had complained, among other things, that Vonage failed to file a tariff.

The Vonage MO&O states that "we preempt an order of the Minnesota Public Utilities Commission (Minnesota Commission) applying its traditional “telephone company” regulations to Vonage’s DigitalVoice service, which provides voice over Internet protocol (VoIP) service and other communications capabilities. We conclude that DigitalVoice cannot be separated into interstate and intrastate communications for compliance with Minnesota’s requirements without negating valid federal policies and rules." See, story titled "FCC Releases Vonage VOIP Order" in TLJ Daily E-Mail Alert No. 1,018, November 15, 2004; and story titled "FCC Adopts Order on Vonage's VOIP Petition" in TLJ Daily E-Mail Alert No. 1,015, November 10, 2004.

However, the FCC released an Order [27 pages in PDF] on AT&T's petition for a declaratory ruling that access charges do not apply to its service in which calls originate and terminate on circuit switched PSTN facilities, but are routed on internet backbone. The FCC rejected AT&T's request, and ruled that the service at issue is "telecommunications service upon which interstate access charges may be assessed". See, story titled "FCC Rules on AT&T's VOIP Petition" in TLJ Daily E-Mail Alert No. 882, April 22, 2004.

The FCC also has an open proceeding regarding IP enabled services generally, that is intended to address issues such as compensation, the Universal Service Fund, 911/E911, consumer protection, and disability access requirements. The FCC adopted its IP enabled services Notice of Proposed Rulemaking (NPRM) [97 pages in PDF] on February 12, 2004, and released it on March 10, 2004. It is FCC 04-28 in WC Docket 04-36. See especially, paragraphs 61-62 at pages 41-43, for its discussion of compensation.

The FCC also has an open proceeding on intercarrier compensation. Even before the recent growth in VOIP service offerings, the compensation regime was outdated. The FCC is in the process of developing new rules to reform this regime. The FCC adopted it intercarrier compensation Notice of Proposed Rulemaking (NPRM) on April 19, 2001. It is FCC 01-132 in Docket No. CC 01-92.

The FCC also has an open proceeding on Level 3 Communications' petition. It filed this petition with the FCC on December 23, 2003 requesting that it forebear from applying the requirements of Section 251(g) and FCC rules to the extent that they might be interpreted to allow local exchange carriers (LECs) to impose interstate or intrastate access charges on internet protocol (IP) traffic that originates or terminates on the PSTN, or on PSTN-PSTN traffic incidental thereto. The Level 3 petition is published in the FCC web site in five parts in PDF. See, part 1, part 2, part 3, part 4, and part 5. See also, stories titled "Level 3 Files VOIP Petition With FCC" and "Summary of Other VOIP Proceedings at the FCC" in TLJ Daily E-Mail Alert No. 815, January 14, 2004.

Summary of SWBT's Tiptop Service and Tariff.

Tiptop is a service that SBC plans to sell to VOIP services providers to enable them to complete VOIP communications to customers on SBC's PSTN network. The tariff just filed with the FCC on Thanksgiving eve describes the service, sets rules and requirements for purchasers of the service, and sets rates.

SBC stated in a document in its web site that "TIPToP service is a new interstate service that offers the providers of Internet Protocol (IP) enabled voice information services the capability to connect traffic from IP enabled voice information service users (IP-VIS users), to Telephone Company End Users, or Off Net End Users using Public Switched Telephone Network (PSTN) based voice services via end offices or tandems subtended by the Telephone Company Access Tandems."

SWBT wrote in its cover letter [2 pages in PDF] for the tariff filing that "TIPToP service consists of switched circuit interfaces specifically designed for use by a provider of Internet Protocol (IP) Enabled Voice Information Services (IP-VIS) to connect traffic from its IP end users to end users of the Public Switched Telephone Network (PSTN) via the Telephone Company's existing network." It added that this tariff takes effect on November 25, 2004.

SWBT wrote in a second document [3 pages in PDF] titled "Transmittal and Justification" that it "proposes to introduce True IP to PSTN (TIPToP) Service into the SWBT’s Access Service Tariff F.C.C. No. 73. TIPToP service is a time division multiplexed (TDM) telecommunications service consisting of switched circuit interfaces specifically designed for use by a provider of Internet Protocol (IP) Enabled Voice Information Services (IP-VIS) to connect traffic from its IP end users to end users of the Public Switched Telephone Network (PSTN) via the Telephone Company's existing network. TIPToP service is not a mandatory offering. IP-VIS providers who choose not to purchase TIPToP service may use other services, to the extent permitted by SWBT’s tariffs and prevailing law, to connect traffic from their IP end users to end users of the PSTN via the Telephone Company’s existing network." (Parentheses in original.)

This "Transmittal and Justification" continues that "TIPToP Service provides two types of switched circuit port interfaces (one-way and two-way) designed to provide seamless functionality between Time Division Multiplexing (TDM) based voice services and IP based Voice Information Services. The interfaces incorporate Transport, SS7 connectivity, choke trunks and call related data base query capability to the tandem or end office switch in which these interfaces are installed."

A third document [41 pages in PDF] filed by SBC revises Tariff F.C.C. No. 73 with extensive new definitions, rules for ordering access under the Tiptop service, description of the Tiptop service, description of the manner of provisioning, enumeration of limitations on the Tiptop service, new customer obligations, rate regulations, and rates and charges.

Powell's Warning.

FCC Chairman Michael Powell released a statement [PDF] in which he responded to SBC's tariff filling.

He wrote that "SBC's interstate tariff for TIPToP service comes at time when VoIP services are continuing to grab consumer attention by offering more choice, lower prices, greater value, and enhanced features. I am committed to ensuring that this Commission avoids any action that might slow the IP-services revolution."

He continued that "Against this backdrop, the Commission, state utility commissions, and the courts all are considering the question of whether legacy access charges should apply to VoIP services. SBC's tariff makes clear that TIPToP is not a mandatory offering and VoIP providers may continue to utilize alternatives to exchange their traffic. Should we conclude that this tariff is being used to justify the imposition of traditional tariffed access charges on VoIP providers or to discriminate against SBC's competitors, the Commission will take appropriate action including, but not limited to, initiating an investigation of SBC’s interstate tariff and any other tariff that proposes similar terms. Nothing in this tariff should be interpreted to force a set of compensation relationships on VoIP providers and their connecting carriers either at this Commission or in other venues."

Powell concluded that "SBC’s tariff arrives at the Commission while we have before us three proceedings that raise issues related to the charges applicable to VoIP services -- a petition filed by Level 3, our larger intercarrier compensation proceeding and a rulemaking on IP-enabled services. I look forward to considering these pending proceedings."