1. Interconnection and Access Presentation by Dale N. Hatfield Chief, Office of Engineering and Technology Federal Communications Commission June 6, 2000

2. Outline Introduction Selection of Points of Interconnection Local (Exchange) Network to Long Distance (Interexchange) Network Interconnection and the Concept of Equal Access Local (Exchange) Network to Local (Exchange) Network Interconnection and Local Number Portability

3. Outline Unbundling and Access to Physical Facilities Importance of Pricing Based Upon Forward Looking Costs Summary and Conclusions

4. Introduction Goals Note Definitions of Interconnection, Access, and Equal Access Simple Models of Network Access and Interconnection

5. Introduction Goals –The terms and rates for interconnection, traffic transfer, and access to unbundled network elements should encourage efficient use and deployment of networks

6. Introduction Note –Additional issues arise when a carrier must interconnect with a competing dominant carrier because the latter has little or no incentive to interconnect and, if required, has an incentive to raise the price or degrade the quality of the interconnection

7. Introduction Definitions of Interconnection, Access, and Equal Access –Interconnection is a general term for the way in which different networks connect to allow traffic to pass between them –Access is a general term for the way that customers (end users or subscribers) or competing providers gain access to networks

8. Introduction Definitions of Interconnection, Access, and Equal Access –Equal (non-discriminatory) access is normally associated with a situation where a provider with substantial market power (e.g., a monopoly telephone company) is vertically integrated so it is itself a competitor

9. Introduction –Equal access requires the monopoly provider to offer access in such a way that competitors: Pay the same price for the same service Have available the same features, functions, and grade of service Have reasonable advance notice of monopoly network changes –Equal access includes physically and functionally standardized interfaces for transmission, switching, and signaling

10. Introduction Simple Models of Network Access and Interconnection –Basic Model (Single Carrier) Local Exchange Long Distance Exchange Local Exchange International Gateway Exchange

11. Introduction Simple Models of Network Access and Interconnection –Model with Multiple Carriers Local Exchange Carrier B Long Distance Carrier D Local Exchange Carrier F Local Exchange Carrier A Long Distance Carrier C Local Exchange Carrier E

12. Introduction Notes on the Selection of Points of Interconnection

13. Local to Long Distance Interconnection

14. Elements of Equal Access (Technical Perspective) –Direct connection –Dial code access (“1010XXX”) –By presubscription/preselection/balloting –Give customers full freedom of choice by combinations of the above

15. Local to Long Distance Interconnection Measures of Quality Access to Telephone Numbers (Numbering Plans and Their Administration) and Number Portability (e.g., 800 number portability) Network Interface Changes

16. Local to Local Interconnection Potential Points of Interconnection (physical): –Line side of the local switch –Trunk side of the local switch –Trunk interconnection points of a tandem switch –Central office cross-connect points –Out-of-band signaling points

17. Local to Local Interconnection Interconnection CO Tandem Interconnection Point Notes (1) Dotted lines indicate out-of-band signaling channels; solid lines indicate “conversation” channels (2) Interconnection includes CO cross-connect points (not shown)

18. Local to Local Interconnection Service control point Signal transfer point Originating switch Donor switch Recipient switch Network Management Order entry Billing Other Caller Local service management systems Number administration Service order activation Number portability administration center Interfaces to OSSs 34 2 5 6 1 7 A B Voice path Signaling link Data path Source: Telephony, September 15, 1997, p. 51. Network Systems Basic Number Portability Architecture

19. Local to Local Interconnection Source: Telephony, September 15, 1997, p. 51. 1 2 3 4 5 6 7 Caller A places a call to ported Caller B. Originating switch examines dialed digits. Recognizing that the dialed number is in a portable local exchange, the switch activates a query trigger. The query is routed to the signal transfer point (STP). STP performs translations and routes the query to the appropriate service control point (SCP). (Note: In some networks, the STP may perform the same function as the SCP). SCP matches the location routing number associated with the dialed number. SCP response message containing location routing number is routed to the originating switch by STP. Originating switch receives response message and routes the call to the recipient switch based on the location routing number. Recipient switch recognizes that query has been performed and completes call based on dialed number. Call Flow

20. Unbundling and Access to Physical Facilities Definition and Statement of the Issue –Bundling occurs when two services (or products) are sold as a package –Bundling allows a firm with monopoly power over one service to effectively monopolize the second by tying the sale of the potentially competitive service (or product) to the purchase of the monopoly service –Bundling can also raise the cost of a competitor by forcing the competitor to buy both essential facilities and services that are not needed

21. Unbundling and Access to Physical Facilities Benefits of Unbundling –Unbundling requirements can encourage competition in those services or product lines that are potentially competitive if unbundled (by isolating the source of the monopoly power) –Unbundling can encourage efficient use of the network by allowing customers (including other carriers) to buy only what they need from the monopolist

22. Unbundling and Access to Physical Facilities Problems with Unbundling –Requiring too much unbundling can impose excessive costs on monopoly providers compared to the benefits –Certain forms of unbundling (e.g., "software unbundling") can potentially cause technical harm to the network –Potentially it may discourage construction of competitive facilities

23. Unbundling and Access to Physical Facilities –Potential unbundled elements: Local loops Local and tandem switches (including vertical features) Interoffice transmission facilities Network interface devices Signaling and call-related data base facilities Operations support systems (OSS) functions Operator and Directory Assistance

24. Unbundling and Access to Physical Facilities Methods of Obtaining Interconnection and Access to Unbundled Elements –Purpose –Physical and virtual collocation and interconnection at meet points

25. Unbundling and Access to Physical Facilities Other access issues: –Eminent domain –Rights-of-way –Pole attachments –Duct space –Inside wiring –Roof rights –“Dry” copper/dark fiber

26. Importance of Prices Based Upon Forward Looking Costs Promotes economic efficiency even without entry Provides appropriate price signals for economically efficient entry Allows entrants to share efficiency of incumbent’s network

27. Importance of Prices Based Upon Forward Looking Costs Promotes efficiency and competitiveness of other sectors of the economy that are vitally dependent upon telecommunications (e.g., tourism, financial services, manufacturing, agriculture)

28. Summary and Conclusions

29. Contact Information Dale N. Hatfield Chief, Office of Engineering and Technology Federal Communications Commission 2000 M Street, NW - Suite 480 Washington, DC 20554 Voice: 202-418-1693 Fax: 202-418-1944 E-mail: dhatfiel@fcc.gov