Research Questions About Terminating the PSTN

      Incumbent carrier initiatives to eliminate the PSTN and their carrier of last resort responsibilities may constitute on of the key evolving policy initiatives going forward. Here are some research questions worthy of investigation:

If consumers must migrate from POTS to a NGN (IP-centric) replacement, what are the net consequences in terms of consumers’ out of pocket costs, as well as network QOS, availability, reliability and  scalability? 

Can wireless networks accommodate the complete off loading of wireline traffic?  Would this offloading exacerbate spectrum  scarcity?

If incumbents continue to rely on wireline plant, e.g., U-verse, do they gain deregulation without conferring much upside consumer benefits?   For example most carriers offer unmetered (All You Can Eat") wireline service  at about $20 a month, but metered wireless service costs 2 or 3 times as much.
 

How would deregulation create incentives for carriers to migrate from copper to fiber media?

As many incumbents have eschewed POTS universal service funding, will they similarly avoid broadband subsidies tied to open network access requirements?

Will the migration remedy the digital divide, including areas with limited or no wireless service?

New pub: Assessing the need for More Incentives to Stimulate Next Generation Investment

    I loath the conversion of nouns into verbs, such as party and incentivize.  Perhaps this  picadillo prompted my latest publication in Vol. 7 of I/S: A Journal of Law and Policy for the Information Society.

    Here's the abstract:

     Incumbent carriers often vilify the regulatory process as a drain on efficiency and an unnecessary burden in light of robust marketplace competition.  Some claim that regulation creates disincentives for investing in expensive next generation networks (“NGNs”), and even accepting subsidies for broadband development if the carrier must provide access to competitors. Without fully assessing the necessity to do so legislators, regulators and judges have accepted the premise that government must create incentives for NGN investment. Incumbent carriers in particular have seized upon the concept of uncertainty as a justification for refraining from making necessary infrastructure investments, despite the onset of declining revenues and market shares in core services. 

     In the worst case scenario, incumbent carriers secure unwarranted and premature deregulation, despite an ongoing need for governments to guard against anticompetitive practices and to promote sustainable competition.  Governments also risk providing direct financial subsidies, or creating a regulatory mechanism for indirect subsidies, to stimulate infrastructure investment when no such catalyst is necessary in light of competitive necessity.  Once a subsidy mechanism is in place, government may not easily “wean” carriers off such artificial compensation.  In rare instances government may find some key carriers unwilling to accept subsidies and in turn disinclined to pursue expedited NGN development, as is currently occurring in the U.S., because incumbent carriers do not want to provide interconnection and access to competitors, a legal duty these carriers must bear when operating as common carrier providers of telecommunications networks, but which does not apply when these carriers offer information services which include broadband.

     This paper will examine how incumbent carriers in the United States have gamed the incentive creation process for maximum market distortion and competitive advantage.  The paper suggests that the U.S. government has rewarded incumbents with artificially lower risk, insulation from competition, and partial underwriting of technology projects that these carriers would have to undertake unilaterally.   The paper also examines the FCC’s recently released National Broadband Plan with an eye toward assessing whether the Commission has properly balanced incentive creation with competitive necessity.  The paper provides recommendations on how governments can calibrate the incentive creation process for maximum consumer benefit instead of individual carrier gain.

Disintermediation on Steroids?

Technological and marketplace convergence, leading to an IP-centric infrastructure, has the potential to eliminate the middleman--disintermediation in the vernacular. We have begun to see this outcome at the margin as some cable television subscribers terminate their video subscription while retaining their broadband access. My nomadic students have little use of "appointment television," i.e., scheduled broadcasts of content. But they increasingly see little value in having the subscriber right of access to particular content. They have every expectation that the content source will make it available for streaming access, e.g., vbia Hulu, or that someone will illegally make the content readily available.

So who needs cable when consumers have little use for schedules or certain access? Comcast and others recognize the need to accommodate consumers' expectation that if they pay for access it better be available just about any time, via any device. Content distributors and sources balk at accommodating via any format, because of the risk of piracy.

Recently television broadcasters' spectrum has been targeted as a potential source for more mobile wireless bandwidth. In light of the fact that only 9% of the television viewing public relies on the free to air source the spectrum may be in play. If so, would local broadcasters suffer disintermediation, because the networks would not need them to reach consumers, or would local broadcasters strike deals with ISPs and establish their own web sources of content?

One should never underestimate the power of incumbency and efforts by incumbents to safeguard their intermediary status. The National Association of Broadcasters has provided local broadcasters with a public service announcement that emphasizes "free" and "local." Never mind that 91% of the audience rely on a multinational intermediary.