HEADLINE: OVERSIGHT HEARING OF THE HOUSE COMMITTEE ON THE JUDICIARY SUBJECT: THE TELECOM MARKETPLACE NINE YEARS AFTER THE TELECOM ACT
CHAIRED BY: REPRESENTATIVE CHRIS CANNON (R-UT)
WITNESSES: CARL GRIVNER, CEO, XO COMMUNICATIONS; BRIAN MOIR, ATTORNEY AT LAW; MICHAEL KELLOGG, KELLOGG, HUBER, HANSEN; PHILIP VERVEER, PARTNER, WILLKIE FARR AND GALLAGHER LLP
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Mr. Goodlatte. The gentleman is recognized for 5 minutes.
Mr. GOODLATTE. Thank you, Mr. Chairman. Mr. Grivner, are you concerned about consolidation in the ownership of the Internet backbone, as we examine this? What does it mean for XO, and what should be done about it?
Mr. GRIVNER. Yes, I am concerned. Right now, XO deals with what's called a peering relationship with most carriers, tier-one peering; meaning the traffic that you import and export, you basically don't pay for, if everything is, you know, fundamentally equal. When you combine these four companies together, you've now created a tier-one-plus, in which companies like XO and others will have to pay for that traffic which up until this point has been part of the Internet, part of building the Internet, and part of the process. Yes, I am concerned.
Mr. GOODLATTE. What would you do about it?
Mr. GRIVNER. Well, what I would do about it is not let the mergers go through. But barring that, I think there have to be some very specific restrictions placed on that traffic, so that pay-forpeering does not occur.
Mr. GOODLATTE. Mr. Moir, are you aware of the effects of the proposed mergers on the ownership of the Internet backbone? And is there any reason to be concerned?
Mr. MOIR. We are still looking at those issues right now; particularly as, you know, they have regional aspects and broader aspects. But at the moment now, we still don't have a position.
Mr. GOODLATTE. Let me ask Mr. Kellogg or Mr. Verveer if they want to respond to either of those two questions.
Mr. KELLOGG. My understanding in this area is somewhat limited, but it is that AT&T and MCI both have national backbone networks. SBC and Verizon do not. So I do not see how the merger would lead to more concentration in the critical national backbones.
Mr. GOODLATTE. Mr. Verveer?
Mr. VERVEER. I wouldn't pretend to any great expertise in this area. My impression, generally, is that this is an area that has become increasingly competitive over the last several years, and is a competitive environment today.
Mr. GOODLATTE. Very good. Mr. Kellogg, Voice over Internet Protocol, it does require a pipe into one's home or business; does it not?
Mr. KELLOGG. That's correct.
Mr. GOODLATTE. And what is USTA's position regarding this? Are some of your members trying to deny non-discriminatory access? Or does USTA have a position on that?
Mr. KELLOGG. My understanding is that USTA's position is that Voice over Internet Protocol is a tremendously important service; that it's, you know, going to dramatically influence the future of telecom; and that it ought to be allowed to develop in a competitive environment.
Mr. GOODLATTE. Does competitive'' mean non-discriminatory access?
Mr. KELLOGG. Well, it's not clear to me that there's a problem there that needs addressing at this point. You say there has to be a pipe into the home. Of course, there's the cable pipe which twothirds of customers currently use; and only one-third uses DSL. If people feel that there's restrictions on their access to broadband services, they are free to switch to the other carrier. Plus, next-generation wireless is going to be incredibly important in terms of broadband access and VoIP services.
Mr. GOODLATTE. Okay. Anybody elseMr. Moir, Mr. Grivnerwant to respond to that?
Mr. MOIR. VoIP as we presently hear it, is a phenomenon that's evolved from basically IP protocol voice traffic, which has been going on on a packetized basis within the large user community forwhat, decades?
Mr. GOODLATTE. Yes.
Mr. MOIR. And the issue we're evolving to now is, you know, you're going to be able to get access to multiple VoIP suppliers from a residential standpoint. From a business standpoint, we get the pipe; albeit, we don't have choice for 95 percent of our locations.
But you get the pipe. You run the packetized data outin this case, VoIP data; which is really voice packets. And then the issue is, does it terminate on another VoIP network to the customer prem, or does it terminate on the switch network and then get subject to something more on the lines of traditional access charges? So some of those issues are still to be flushed out.
Mr. GRIVNER. Yes, full VoIP deployment, full effect of it, does depend on that broadband pipe, that last-mile access to the customer; whether it be fiber provided by an RBOC, or by XO. Or a municipality that decides to get into the cable business would be another option.
Mr. GOODLATTE. Do you think that that type of technology is receiving fair treatment from those who own the pipes?
Mr. GRIVNER. Receiving fair treatment from those who own the pipes? Well, if the CEO of Vonage were here, he'd probably say No.'' Matter of fact, I know he would say No.'' I was with him yesterday.
Mr. GOODLATTE. Very good. Mr. Kellogg, do you want to respond to any of that, or you'replease.
Mr. CANNON. We actually need to be out of this room in time, at about just about 20 after. So since Ms. Jackson Lee has joined us, we'll stretch that a little bit. But if you could give us a quick answer that would be
Mr. GOODLATTE. That's all I'd ask, Mr. Chairman.
Mr. KELLOGG. My understanding is that Vonage has access now. They are adding customers at a rapid rate. And I don't see a problem that needs any sort of regulatory solution.
Mr. GOODLATTE. Very good. Thank you, Mr. Chairman.
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