FCC Forces LECs to Accelerate TDM Migration to IP Technology

Several matters before the FCC could have substantial dollar and technology impacts for enterprise customers. The FCC’s special access services and USF contribution reform proceedings will significantly affect pricing for enterprise services, beginning sometime in 2014.

Enterprise customers, as well as SMBs, buying TDM-based wireline voice and data services bear the full brunt of today’s elevated USF assessments (via carrier USF recovery pass-through charges). Consistent with the migration to IP services, enterprise customers are compelled to explore strategies to minimize the USF burden. Two ideas come to mind:
(1) migrate voice as well as data traffic to Multiprotocol Label Switching (“MPLS”); and/or
(2) where feasible, migrate data traffic to high speed Internet access service.

The manner in which services providers assess USF on MPLS revenues varies considerably. MPLS services providers have sought a declaratory ruling that would impose a uniform, relatively modest USF contribution burden on MPLS revenues. Moreover, as intra-corporate voice traffic is shifted to MPLS, a customer’s overall USF costs should decline as expenditures for standalone voice services decline.

Subject to reliability and security considerations, migrating some portion of enterprise data traffic (alternatively, converting as many locations as feasible) to Internet access service yields several economic benefits. Internet service is the least cost data communication option for a given capacity or data rate and, as an information service, is not subject to USF revenue contribution obligations at this time.

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