Convergence and the Implications of an Everything over IP Future

Communications and information technologies and associated industries are experiencing a major transformation. Around the globe, the sector has moved from local and state monopolies in telecom and media services to an environment characterized by competition; controlled competition in some areas, intense and unbridled in others. In addition, the bygone era of a separate, distinct and well-defined sector organization has evolved into an era where the boundaries between companies and the services they provide are often blurred.

This convergence phase has been the result of many events such as the digitalization of all types of content, the significant reduction of communication equipment, and the great increase in storage that is now available at minimal costs. Today’s broadband networks make video distribution a reality that is bringing enormous challenges to policy makers and regulators. Technological innovation, convergence, and competition are driving the transformation of national, regional and global economies. Regulators and policy-makers alike have found it difficult to maintain pace.

The conversion of telecommunication networks and all forms of communication and information content to digital standards has created an electronic network infrastructure that facilitates the convergence of formerly discrete telecom services on a single telecom network.  More recently, extended applications of Internet Protocol (IP) have permitted the convergence of services on the Internet to include not just data, pictures, music and video, but also voice communication, including public voice services. Voice over IP (VoIP) is the latest major step in a convergence process that has been underway for three decades. It means that now all types of services can be provided in an integrated manner over the Internet using IP. The Internet services in turn are provided over the digital network facilities of telecom operators.

With IP applied to all services, the structure of the overall market for communication services is radically changed from the former vertically integrated structure where most services and facilities were licensed and provided together, to a horizontally structured market consisting of distinct submarkets for network infrastructure capacity, network management, communication services and information services. This reduces the barriers to entry to this market and its submarkets significantly and provides new opportunities for increased participation by new players, entering submarkets at any level and providing a wide variety of service package options.

A more precise characterization of this more recent development in convergence using IP would be “Everything” over IP. All forms of electronic communication now can be provided in an integrated fashion over a single network using IP. Although IP was developed for, and initially applied on, the Internet, the largest users of IP are the incumbent telephone operators around the world. They are in the process of converting their entire telecom systems to IP because of enormous cost reductions and the potential for providing new converged services in the future information economy, including e-commerce, e-government and other e-application services. At the same time, the extended application of IP by Internet Service Providers (ISPs) to include public voice services has opened a major new service opportunity for them, and introduced a significant new element of participation and competition in the supply of both public voice services and new converged services.

The introduction of VoIP services has raised a number of issues of adjustment to the new environment by telephone operators and service providers, by policymakers and regulators, and by users. Any major technological improvement that dramatically reduces unit costs and expands service capabilities offers the potential of enormous benefits in terms of network and market expansion, cost and price reductions, and new services development. But it also brings the threat of significant losses to those benefiting from traditional ways of doing things, and a requirement that the inherited structure of policies and regulations be reassessed and modified to meet the new challenges and opportunities unfolding.

That is precisely what the U.S. Congress has undertaken under the auspices of a National Broadband Plan and through the FCC’s Broadband Action Agenda, which lists more than 60 key actions, proceedings, and initiatives the Commission intends to undertake over the next several years to implement the recommendations of the National Broadband Plan.

What all of this translates to is that the regulatory environment is becoming even more complex and volatile than in the past, and will continue to evolve at alarming rates.  The CommLaw Group’s team of talented attorneys, many of whom are accustomed to the FCC’s implementation of transformative regulations, assists our clients in dealing with these new compliance challenges. From the very first communications satellite in orbit, the first cable franchise, the rise of MCI and competitive long distance through the break-up of Ma Bell, the introduction of competition through the Telecommunications Act of 1996 and the bursting of the “Dot Com” bubble, our firm’s leaders have guided clients through it all. And due to our vast experience our firm is poised to lead a new generation of communications enterprises through the coming changes.