FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

In the Matter of
Federal-State Joint Board on
Universal Service

CC Docket No. 96-45

REPLY COMMENTS OF NORTHERN TELECOM

Northern Telecom Inc. ("Nortel") hereby replies to some of the comments on the Commission's rulemaking to address Universal Service and establishment of a Joint Board.[1/] Nortel supports the Commission's and Congress' policies, as reflected in the Notice, of (i) reaffirming the importance of universal service and (ii) refining universal service support mechanisms in light of the increases in competition that will emerge as a result of the Telecommunications Act of 1996. Nortel believes that the Commission's previous universal service policy has contributed greatly to the development of a robust telecommunications infrastructure in the United States, and urges it to adopt rules that will continue this important function. Nortel also believes that as telecommunications technology

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1/ Federal-State Joint Board on Universal Service, CC Docket No. 96-45, FCC 96-93, released March 8, 1996 (hereafter cited as "Notice").

Nortel is the leading global supplier, in more than 100 countries, of digital telecommunications systems to businesses, universities, local, state and federal governments, the telecommunications industry, and other institutions. The company employs more than 23,000 people in the United States in manufacturing plants, research and development centers, and in marketing, sales and service offices across the country. Nortel is keenly interested in universal service and its impact on the telecommunications network.

Nortel has several observations with respect to the technical issues raised in the Notice and the initial comments in this proceeding. In determining the parameters of services to be supported by universal service, Nortel agrees that such services should include more than merely dial tone. Nortel supports the position that Touch Tone capability should be an integral feature of a subscriber's service for purposes of universal service support.[2/] Touch Tone capability is now much more than a dialing convenience.[3/] Indeed, Touch Tone dialing is necessary to access many enhanced and automated services. Nortel thus believes that

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2/ Notice at [[paragraph]] 19. See also, Comments of AT&T, ICORE, Cincinnati Bell, Missouri PSC, GVNW, Inc., BellSouth Communications, Oregon independent Telephone Association, Washington Independent Telephone Association.

3/ The apparent importance of TouchTone dialing is reflected in the fact that according to Yankee Group statistics, some 81.1% of U.S. households have TouchTone service on the main line in their home.

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Touch Tone dialing should be considered part of the basic infrastructure as a key enabling technology.

Nortel similarly contends that Signaling System 7 ("SS7") should be considered fundamental in today's telecommunications infrastructure and part of universal service. SS7 is widely accepted as the key enabler to enhanced services such as transmission of calling party number. In determining universal service support, Nortel urges the Commission to include allowances for SS7 deployments.[4/] Nortel observes that SS7 has not yet been fully deployed in the telecommunications network, particularly in smaller rural communities.[5/]

To the extent that the Commission is adopting a dynamic (and not static) concept of universal service, the Commission should also bear in mind that many of the advanced network capabilities that will emerge from Advanced Intelligent Network ("AIN") functionality will also be dependent on having SS7 capabilities deployed. SS7 will therefore continue to grow in importance in assuring that all Americans have access to advanced telecommunications services. Universal service support for SS7

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4/ Including SS7 capabilities within the definition of universal service is also consistent with the Congressional policy supporting the creation of incentives for the deployment of new and advanced telecommunications technologies, as recently reflected in Section 706 of the Telecommunications Act of 1996. See also, 47 U.S.C. [[section]] 157 ("It shall be the policy of the United States to encourage the provision of new technologies and services to the public.").

5/ Although becoming more widespread, SS7 capabilities have not yet been universally deployed. At the end of 1994, the RBOCs had deployed SS7 on approximately 88% of their lines. The deployment by the other telephone companies varies, although in general the levels are significantly below those of the RBOCs (at about 35%).

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deployment thus will render increasingly larger dividends over time.

As a general proposition, Nortel also supports the Commission's tentative conclusion that it is unnecessary for the Commission to prescribe specific technical standards to ensure quality telecommunications services.[6/] Nortel believes that the current standards setting organizations are able to establish the necessary technical standards. There is, however, one area where Nortel thinks some additional industry effort should be focused - development of standards specifically adapted to the needs of rural, high cost areas.

In the past, the Rural Electrification Administration ("REA") has largely fulfilled this role. However, with the increasing complexity of the telecommunications network and the limited resources of REA, little attention has been paid to this area. As a result, there has been a general tendency by rural telephone companies and their consultants to rely on Bellcore recommended specifications, but without making adjustments for the unique characteristics of rural, high cost areas. Bellcore typically develops its specifications for the topologies of urban markets that are common to the Bell companies.[7/] As a result,

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6/ Notice at [[paragraph]] 68.

7/ For example, Bellcore has developed specifications for ISDN

and for host to Integrated Digital Loop Carrier (IDLC) interconnection (TR-303) that add some cost and complexity, but which result in overall savings because of the scale economies of deployment of into high density environments typical of many Bell company urban systems. These complex requirements are also necessary to allow multi-vendor compatibility between switches and the DLCs. However, their application in a rural environment (continued ...)

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applying such requirements in a rural, high cost environment could lead to higher costs for the rural telephone companies than would be the case if the specifications were adjusted to take account of the different characteristics of rural environments.[8/]

Nortel also contends that in defining universal service and developing universal service support mechanisms, the Commission should be technology neutral.[9/] Traditional telecommunications services are defined from a wireline perspective. The Commission should ensure that the definitions of services supported by universal service funding reflect the impact of new technologies and recognize the similarities as well as differences.[10/] There are now numerous alternatives to the traditional wireline delivery of telephone service, including CMRS, fixed wireless local loop services, LMDS, satellite and cable.

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7/ (...continued)

imposes the same costs, but does not present the opportunity for any offsetting savings from economies of scale or traffic concentration, nor are there likely to be the same needs to support multiple vendors.

8/ Perhaps the Commission could use universal service funding to ensure that an appropriate standards-setting entity has the necessary resources to fulfill the specific role of developing standards for rural telecommunications networks.

9/ Cf., Notice at [[paragraph]] 18 ("voice grade service, whether provided by wireline or wireless technologies, should be considered indispensable").

10/ Nortel, in Table 1 of its Reply Comments in WT Docket No. 96-6 on CMRS Flexible Service Offerings (submitted March 25, 1996), identified important differences in the service capabilities of fixed wireless local loop and mobile cellular technologies, differences which would be important in some applications and not important in others.

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In light of advances in technology and under certain circumstances, wireless terrestrial and satellite services may be less costly to deploy than wireline networks. After an initial investment in base stations or satellites, the incremental cost of adding a subscriber will be relatively small. Thus, some wireless services may be well suited for ensuring access to advanced telecommunications services in remote and rural applications. The Commission should thus ensure that its requirements are defined in a way that is technology neutral so as to be able to take advantage of these economies where they are appropriate.

New telecommunications technologies are also capable of delivering various mixtures of basic and advanced services. Broadband networks (deployed by the telephone companies and others) are capable of providing telephone service, video programming, Internet access, interactive video services and other similar offerings. In developing its rules for defining and supporting universal service, the Commission must ensure that its requirements do not inadvertently force the service providers to build separate infrastructures.[11/]

Nortel has also accumulated extensive experience in understanding the issues and the benefits for using broadband

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11/ Nortel is concerned that in establishing rules that limit a telephone company's ability to fund non-universal service facilities from universal service support payments, the Commission not intentionally or unintentionally preclude or otherwise discourage the deployment of multifunction networks. Appropriate accounting safeguards should provide sufficient protection from potential anticompetitive abuses; it would be inefficient and counterproductive to require separate networks or facilities to serve universal service needs.

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networks to support education through distance learning and other means for K-12 schools as well as with telemedicine in healthcare. Nortel has been involved in numerous projects to develop and refine such applications. Attachment A hereto is a more detailed description of Nortel's view of important applications in these fields.

Based on its experiences in education projects, Nortel has some specific suggestions for ensuring that K-12 schools will be able to take full advantage of the benefits made possible by an enhanced telecommunications infrastructure. Distance learning allows schools to help maximize the use of the education resources. The Commission should thus adopt rules that would ensure that K-12 schools have broadband network access. Nortel also urges the Commission to recognize the importance of ensuring that the telecommunications infrastructure to be used by these schools supports the industry standard signaling system for ATM call setup in order to maximize interoperability. Nortel further believes that the telecommunications infrastructure used by the schools should be capable of utilizing MPEG2 as the standard format for interactive video.

Nortel's experiences with telecommunications projects in K-12 schools also confirms the value to education of Internet access. In order that these opportunities be maximized, the schools must also deploy suitable local area network ("LAN'") capabilities, such as Ethernet. Such a LAN will allow the students to have access to the full benefits of a multimedia, collaborative learning environment.

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Respectfully Submitted,
Stephen L. Goodman
Halprin, Temple, Goodman & Sugrue
1100 New York Avenue, N.W.
Suite 650, East Tower
Washington, D.C. 20005
(202) 371-9100
Counsel for Northern Telecom Inc.

Of Counsel:

John G. Lamb, Jr.
Northern Telecom Inc.
2100 Lakeside Boulevard
Richardson, Texas 75081-1599

Dated: May 7, 1996