FCC Bandwidth Forum

Federal Communications Commission

January 23, 1997

Introductory Remarks

Mike Trest, Chief Scientist

ATMnet, San Diego, California

1. I thank the commissioners and staff of the FCC for the opportunity to speak with you today.

2. ATMnet provides Internet services using the latest Asynchronous Transfer Mode technology. We provide our customers with direct access to our network at up to 155 Mbps, which is about 100 times faster than 1.5 Mbps services used by most businesses and almost 7,000 times faster than most dial up modems.

3. The internet is not an economic or technological monolith. It is a mosaic of tens of millions of individuals, hundreds of thousands of businesses and thousands of ISPs who use computer to communicate. Furthermore, Internet use has introduced educational, cultural, political, and economic gains to almost every segment of our population.

4. The ISPs, Dial Up, And Business Users Interact Dynamically. Whenever a business publishes a hot WEB site or an upgrade of a popular program, millions of users redirect their bandwidth demands towards that site. As a result the ISP supporting that site sees huge spikes in backbone load and the PSTN may experience periods of longer switched call duration. However, switch congestion is a highly localized phenomenon with some near-term solutions.

6. The reported problems of PSTN congestion are related to regulatory and tax issues relative to new investments. ISPs, Dial Up, and Business users have invested billions of dollars in the Internet. However, unlike the LECs, 20 or 30 year bond repayments and long depreciation schedules are not part of the ISP's economic equation. Unless the FCC and IRS rules are changed, the LECs will never be able to respond to Internet demand or technology changes as quickly as the ISPs are now responding.

7. Perhaps this is why most of our Local Exchange Carriers are now investing in other regions of the world rather than our own home towns.

8. Concerns about LEC movement into the Internet Service Provider business should be addressed by the commission. Years of regulatory protection has provided the LECs with economic powers which could be used inappropriately to restrain non-TELCO related ISPs. On the other hand, ISPs seek the opportunity to compete on a level field. To achieve this level field, FCC regulations and LEC business practices changes are needed.

9. Some Suggestions To Improve PSTN Congestion:

10. ONE: Balance Exchange Hot Spots. Switch path congestion in exchanges with a concentration of ISPs can be quickly remedied by some minor encouragements. If the ISP and the LEC, for example, could find a regulatory environment in which to negotiate market-area dial plans, area wide prefix coverage, or reduce charges for remote-exchange back haul, the problem of congestion due to 'hot spots' could be resolved in a matter of weeks. However, discussions of this and other solutions usually fall apart over tariffs, alleged regulatory constraints, or simple inertia on the part of the LEC.

11. TWO: Use Alternate Local Switching. The historic LECs now have alternative dial tone competition in most major markets. MFS and TCG, for example, are providing additional switching capacity in many markets. If the historic LEC is not keeping up with switch capacity demands, then ISPs should divert use to alternate vendors.

12. THREE: Encourage DS1 Instead Of Switched DS0 For Business Users. If Internet business users moved to leased DS1 circuits instead of switched DS0 circuits, switch congestion could be reduced. For the strategy to succeed, both ISP and LEC pricing would need to change. The cost differential between ISDN dial service at 128 Kbps and DS1 dedicated service at 1.5 Mbps is only $1,000. The ISP's cost differential is about the same. If the LECs were encouraged to make similar DS1 price adjustments, then hundreds of thousands of small business users would gladly move off of PSTN facilities. This should be economically interesting to both LECS and to ISPs.

13. FOUR: Improve ISP and LEC Technology Cooperation. ISPs and LECs should be working together to better utilize the existing infrastructure. For example, with a bit of regulatory encouragement, unbundled access by ISPs to copper pairs in a co-location space could lead to earlier deployment of Internet friendly technologies. However, LEC business practices do not encourage this cooperation.

14. In the absence of greater cooperation between ISPs and LECs, it should not surprise anyone here that ISPs will invest entrepreneurial capital in non-TELCO infrastructure projects.

Thank You.