SBC Counters Its Critics

In lightning fast fashion, a company executive has flatly denied published reports that SBC's newly announced TipTop termination plan is anti-competitive and designed to give the Baby Bell a huge head-start in VoIP-to-the-home service.

An SBC Communications executive has testily denied published reports that a planned company filing with the Federal Communications Commission to introduce enhanced VoIP termination at higher prices are potentially anti-competitive and could lead to a virtual hegemony over IP telephony on the part of the Baby Bell.

SBC announced Thursday it will file a tariff with the Federal Communications Commission in the next couple of weeks to introduce True IP to PSTN (TIPToP), which says provide better quality and enhanced functionality to what is available in the market today.

However, VoIP providers who want to use the service will have to pay a yet-to-be determined fee for the service. They can also choose not to pay the fee and continue to offer their VoIP service as they do today, said SBC spokesman Michael Balmoris.

Thursday, the Wall Street Journal, Information Week and a number of online blogs reported that SBC’s move may result in increased prices for VoIP services terminating on the company’s network.

Friday, SBC Vice President James C. Smith issued a statement flatly denying the reports.

“Contrary to the mistaken impressions of some parties who are trying to sow regulatory confusion, TIPToP is not a mandatory service and VoIP providers are not required to purchase it,” Smith wrote. “Instead, TIPToP will succeed or fail on its merits in a free, open marketplace and VoIP providers who choose not to purchase TIPToP may still connect to the circuit-switched network through other lawful means available today.”

“The issue of the appropriate legal application of access charges to VoIP service is a question for the FCC to answer, not SBC. Permitting SBC's TIPToP tariff to become effective simply provides another marketplace option for VoIP providers and does not pre-judge how the FCC will ultimately rule on this important question.”

It sounds like TiPTOP offers VoIP carriers a higher quality grade of interconnection to the SBC PSTN than they would otherwise get, said Steve Titch, telecom analyst for the Chicago-based Heartland Institute. “VoIP carriers will still have the choice to interconnect with SBC or touch the PSTN at any other point at the PSTN at terms of its own choosing.”

Titch and independent telecom analyst Jeff Kagan also take exception to the accusations by some that the tariff filing will provide SBC with an unfair advantage.

“That SBC can use inherent quality advantages of its TDM network to offer competitive differentiation on its own VoIP effort is not unfair competition,” Titch said. “For the last two years VoIP carriers have proclaimed that the ILEC's copper networks were inefficient, uneconomical dinosaurs. Now that that SBC has found a way to leverage this ‘"dinosaur,’ the VoIP carriers can't turn around and say the TDM network makes them impervious to competition, at least with any credibility.”

Titch added that TiPTOP looks ahead to the end of today's arbitrary intercarrier compensation rules, which VoIP carriers happily leverage, to the inevitable time when intercarrier compensation is largely uniform across all carriers. At that point, quality and differentiation aspects, like TipTOP, will become reasons for VoIP carriers to choose interconnection with one carrier or another.

“This is something the entire industry has been doing,” Kagan said, adding that the other “Baby Bells can be expected to follow similar strategies. “I don’t think it’s harmful to competition unless they pull the [currently provided] service to VoIP providers out of the market.