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ICA Uses All Its Resources to Re-Educate Telecom Industry and Congress on Bypass.

One major issue that the International Communications Association has been involved in is the issue called bypass. The issue involved three areas of government: the courts, Congress and the FCC. ICA brought all its resources to bear in dealing with this issue.

While the term bypass is new to the telecommunications industry, some of the things the term refers to have been in existence for years. Bypass first became a subject of discussion within the telecommunications industry shortly after the Department of Justice and AT&T announced on January 8, 1982, their agreement to a proposed divestiture of the Bell operating companies (BOCs) from AT&T in order to prevent Judge Greene from implementing his own view of an appropriate decision. A concern quickly developed that AT&T would bypass its soon to be divested BOCs in order to directly connect to large customers of AT&T.

This is how the term bypass was first used. The concern was that AT&T would

no longer have the incentive to route traffic from its large customers through the BOCs once the Bell System was dissolved. AT&T would seek to reduce its cost of end-to-end service to large customers by bypassing the BOCs and other exchange carriers. It seems that much of the rhetoric about the so-called bypass crisis lost sight of how the term came about. Different parties within the industry developed their own varying definitions of the term. Some attempted to have the Congress legislate the issue.

Much of the early confusion about bypass was caused by AT&T. When the term bypass developed it was they who stood to lose something (such as their ability to directly interconnect their major customers). As the last Congress began to review the FCC's access charge proposals, AT&T attempted to change the definition of bypass in order to put any negative connotation of the term on the backs of its major customers. AT&T began to say that the bypass issue was user-owned and operated transmission facilities, not them. They spoon fed this line of reasoning to their soon to be divested BOC employees, state regulators, the FCC, members of Congress, public consumer groups and the press. Unfortunately for users, AT&T was quite successful during the early stages of this misinformation campaign.

The Congress actually proposed to ban or tax user-owned and operated transmission facilities. The tax proposal was passed by a subcommittee in the House of Representatives. Eventually, ICA wa able to stop these anti-user proposals before Congress.

In order to do this, ICA used its own resources: its ICA members, the Washington, DC offices of its member companies, the Public Policy Committee, its economic consultants at Economics amd Technology Incorporated, and its Washington counsel and ICA's Washington office. ICA used these resources to educate members of Congress, their staffs, the press, dissident carriers, far-sighted state regulators and other users (and their associations). More than 75 of the Washington offices of ICA member companies participated, numerous ICA members, and the members of the Public Policy Committee all devoted many loong hours during ICA's effort to re-educate the Congress on the bypass issue. Fortunately, this effort was succcessful.

As the Congress was occupying itself with the weighty telephone issues of the nation, the FCC was continuing to develop its access-charge policies, based in part on AT&T's successful effort to put the burden of the so-called bypass issue on the backs of users who owned or contemplated owning private transmission facility systems. Subsequently, the FCC initiated a proceeding to gather data on the bypass problem. In May of 1984, ICA submitted to the FCC its own bypass study. The study gained industry-wide respect because so many ICA members took the time to answer the questions and return them to our economists for compilation.

That study, and subsequent pleadings by ICA, pointed out, among other things, that the so-called bypass problem is not caused by user-owned and operated systems. It also showed that one of the main reasons many users may provide their own services and facilities is because the carriers are not responding to users' service needs. Indeed, ICA showed that any bypass problem would most likely be caused by carrier bypass--offerings by AT&T Communications that bypassed exchange-carrier facilities and services. On the other hand, other parties, such as the exchange carriers and AT&T Communications sought to blame large users for bypass by furnishing the FCC broad definitions of bypass that in some cases even included LANS or intrasystem wiwring provided by the user. ICA's Washington counsel attempted to educate the FCC commissioners, their staffs, the common carrier bureau staff and the press.

The FCC adopted its first Bypass Report on December 19, 1984. The FCC defines two kinds of bypass; service bypass (the use of carrier private lines to bypass exchange carrier switched services) and facilities bypass (construction of facilities by private users or carriers to bypass exchange-carrier facilities and services). The FCC's principal findings were:

* Bypass is occurring now and will continue to grow. The high costs of using the public-switched network, decreasing technology costs, increasing traffic concentration and new telecom needs provide incentives to bypass.

* During the next few years, service bypass (use of private lines) will be the most prevalent form of bypass.

* The establishment of direct links between long-distance carriers and points with large concentrations of traffic appears to be the most likely source of growth in service bypass in the next future.

* Direct links between interexchange carriers (particularly AT&T Communications) and aarge customers may divert virtually all WATS traffic and an indeterminate amount of ordinary long-distance calls from the public switched network.

The FCC Report, and the discussion of the Report by individual FCC Commissioners, clearly show that the FCC has refocused its thinking on bypass to more closely agree with the ICA analysis of the issue. Thus, the FCC now recognizes that the problem is not user-owned and operated systems, but rather if there is a problem it is carrier-provided services (particularly, services provided by AT&T Communications) that may ultimately bypass local-exchange switched services. While the issue of what charges, if any, should be applied to bypass facilities (including AT&T communications bypass systems or leaky PBXs) must potentially be dealt with, the refocusing of the blame for bypass away from large private users' systems is a significant victory for ICA. ICA will continue to monitor bypass developments in order to insure that users' view are represented correctly.
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Author:Moir, B.
Publication:Communications News
Article Type:transcript
Date:Jun 1, 1985
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