Florham Park - May 28, 2004 - Global Crossing (NASDAQ: GLBCE), a leading innovator in Voice over IP (VoIP) and other IP-enabled services, filed comments with the Federal Communications Commission (FCC) (Wireline Docket Number 04-36) in response to the FCC's Notice of Proposed Rulemaking (NPRM) concerning the proper regulation of IP telephony.
Global Crossing believes that the FCC's recent decision in the Free World Dialup docket compels it to treat all IP-enabled services as information services subject to exclusive federal jurisdiction.
"The FCC has already concluded that IP-enabled services offered over pre-existing broadband services are not telecommunications or telecommunications services. Rather than engage in a case-by-case determination as to whether a broadband connection previously existed, the FCC must simply apply the same rules to all IP-enabled services" said John Legere, Global Crossing's chief executive officer. "As we state in our comments, the FCC must establish simple, uniform rules and put an end to the constant gamesmanship that currently plagues the industry."
Global Crossing's comments offer a strategic vision for the categorization of IP-enabled services, the applicability of various rules and regulations, the public interest obligations of IP-enabled service providers, regulatory jurisdiction, and inter-carrier compensation. Global Crossing believes the FCC has the opportunity to set a new course for regulation and should do so in a comprehensive manner consistent with Global Crossing's REFORM agenda:
Rationalize inter-carrier compensation.
The FCC must establish a uniform inter-carrier compensation arrangement that not only recognizes that a "minute is a minute," but also that a "packet is a packet." All traffic exchanged between carriers, regardless of jurisdiction or type (voice, data or video) must be exchanged at a uniform rate to be negotiated between individual carriers without the distortion of past regulatory policies. The existing patchwork system of inter-carrier compensation invites arbitrage, distorts investment, and is a source of litigation within the industry. A unified inter-carrier compensation arrangement will eliminate this source of friction for the telecommunications industry.
Establish a swift and efficient dispute resolution forum.
The perpetual litigation surrounding FCC rulemaking efforts is one of the principal issues plaguing the telecommunications industry. The rulemaking process itself is becoming a barrier to entry as only the largest carriers can afford to participate. The FCC must establish a swift and efficient dispute resolution forum that allows carriers to quickly resolve disputes and keep their focus on delivering service to consumers. An arbitration procedure similar to that used in major league baseball whereby each party to a dispute puts forth its "best and final" offer would be ideal.
Formulate clear and simple rules and regulations.
Overly complex or vague rules simply invite litigation and fail to create the certainty and predictability necessary for a stable investment climate. The FCC's experience with unbundled network elements is the most recent example of this. FCC rules must be clear and unambiguous.
Overhaul universal service.
Any comprehensive reform effort must include an overhaul of the current universal service system, which is also a dysfunctional element for the industry. Appropriate modifications can be addressed in existing universal service proceedings currently before the Commission consistent with four guiding principles:
* the universal service fund must be sized appropriately so that it only supports universal service objectives;
* eligibility criteria must be refined so that the fund is not used as an earnings support mechanism for carriers;
* source funding must be broad-based and competitively neutral; and
* disbursements from the fund should be keyed to the removal of implicit subsidies embedded in the rates of recipients.
Consideration must also be given to alternative universal service funding mechanisms.
Redefine public interest obligations.
Global Crossing supports the VON Coalition's efforts to work with the National Emergency Number Association ("NENA") to develop appropriate solutions for supporting 911/E911 services in an IP environment. However, the FCC needs to recognize that the greatest challenge for 911/E911 service is securing proper funding for the Public Safety Answering Points ("PSAPs"). The industry must explore new ways of working with local municipalities to bring the benefits of IP technology to the public safety sector.
Maintain authority over essential bottleneck facilities.
While IP-enabled services hold great promise for bringing competitive choice to consumers, the FCC must continue to exercise authority over bottleneck facilities and continue to enforce appropriate interconnection and unbundling rules.
"The overarching theme of our REFORM vision is that a few simple rules and safeguards will allow the industry to operate in a largely deregulated environment, " added John Legere, Global Crossing's chief executive officer. "Although we recognize the regulation of monopoly services, we strongly believe that the telecommunications industry and consumers would best be served by a free and open arena for IP-enabled services."
To learn more about Global Crossing's REFORM vision, the full comments filed with the FCC can be found at www.fcc.gov.
"As a leader in IP-services, we have a strong desire to create an industry that is allowed to grow and prosper without the cumbersome restrictions of regulation," Mr. Legere concluded. "By following the tenets of our REFORM vision, the FCC will simplify the regulatory landscape and steer the entire telecommunications industry into a new era of recovery and health."
About Global Crossing
Global Crossing (Nasdaq: GLBCE) provides telecommunications solutions over the world's first integrated global IP-based network. Its core network connects more than 300 cities and 30 countries worldwide, and delivers services to more than 500 major cities, 50 countries and 6 continents around the globe. The company's global sales and support model matches the network footprint and, like the network, delivers a consistent customer experience worldwide.
Global Crossing IP services are global in scale, linking the world's enterprises, governments and carriers with customers, employees and partners worldwide in a secure environment that is ideally suited for IP-based business applications, allowing e-commerce to thrive. The company offers a full range of managed data and voice products including Global Crossing IP VPN Service, Global Crossing Managed Services and Global Crossing VoIP services, to more than 40 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs.
Please visit www.globalcrossing.com for more information about Global Crossing.
