Some Brief Comments on Terminating the PSTN

NPR's All Things Considered covered the PSTN termination story including some words from me: http://www.npr.org/blogs/alltechconsidered/2013/11/18/246001725/have-we-reached-the-end-of-the-landline.

Telephone Pedestals and the Second Amendment

            Once upon a time when telephone companies provided service via wires these companies secured free rights of way to install equipment and lines.  In many locations the companies replaced telephone poles with underground conduits.  When telephone companies needed to splice a service line to a home or business they installed a pedestal above ground.  These metal or plastic pedestals do not have a pleasing appearance even with the use of forest green coloration.  They were necessary splice points where telephone company technicians connected and disconnected service.

            Now that telephone companies want to provide anything but wireline telephone service it strikes me that they should lose the rights of way granted to them by state public utility commissions.  If a company does not provide common carrier telecommunications services, then surely it has no public utility right to take a portion of my property for their use free of charge.  Right?

            I mean if a telephone company no longer wants to serve as the carrier of last resort—or first resort for that matter—then they in effect should be deemed to have abandoned their right to secure a property interest in my land.  As information service providers, like VoIP service providers, former telephone companies no longer should have the right of eminent domain granted by states to bona fide public utilities.   It seems straightforward to me: if a common carrier opts to abandon its common carrier duties, then it should lose its rights of way over private property for lines that no longer provide common carrier services, and possibly won’t provide anything at  all.

            So when my telephone company terminates PSTN service access on my property, they can pull out their copper and by the way be sure to pull out the pedestal while you’re at it.  Oh and by the way, I don’t want to ever see you again on my property.  Going forward you would become a trespasser and I reserve all my Second Amendment rights to brandish a weapon to encourage one of your few information service contractors or employees to leave.

             Gee . . maybe the Tea Party, the National Rifle Association and I have something in common.

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?

Terminating the PSTN

            A month or so ago Telecommunications Policy published my article entitled The Mixed Blessing of a Deregulatory Endpoint for the Public Switched Telephone Network.  At the time of publication I did not have the insights and clarity of purpose provided by AT&T’s bold initiative to couple a substantial increase in capital expenditure with the elimination of regulation. See http://www.att.com/Common/about_us/files/pdf/fcc_filing.pdf.

           AT&T couches its proposal as the progressive and timely replacement of copper-based telephone technology (Time Division Multiplexing) with a wireless-friendly and Internet-based standard.  Of course we should applaud new “sunk” investment in infrastructure and yes an Internet Protocol standard efficiently promotes technological and marketplace convergence.  But as I stated in the article there is more to this initiative than AT&T benevolence and competitive necessity.

            It has become clear to me that AT&T seeks to leverage “spade ready,” “job creating” investment for the following financial benefits:

1)         elimination of hundreds of thousands of jobs many of which are currently filled by union employees;

2)         billions of dollars in avoided tax liability generated by the coupling of new capital investment and the write off of most copper and obsolete switch assets that have artificially elevated values which, over the years, have rewarded AT&T and other incumbent wireline incumbents with excessive rates of return and universal service subsidies; and

3)         the replacement of common carrier regulated telecommunications services with a blend of mostly unregulated information services with a few residual telecommunications   services, such as basic wireless voice treated as common carriage, but subject to “streamlined” regulation.

           The quid pro quo that AT&T proposes surely will come across as reasonable if not generous to the uninformed and the purposefully ignorant legislator.  To be clear AT&T must upgrade its network in recognition that basic voice revenues—wireline and wireless—will decline substantially.  Why not leverage such necessary investment in exchange for a Christmas wish list of deregulatory—make that unregulatory—goals?

           Only in this purposefully ignorant and politicized environment can AT&T and other incumbents condition essential and commercially necessary change with regulatory changes that eliminate still needed safeguards.  Do we honestly think the migration from wireline service, backed up by carrier of last resort duties, to wireless service, with no geographical service mandates and rate oversight, will have no adverse impact of the current price, quality of service, availability, reliability, consumer protection and the public interest safeguards available to wireline consumers?  Didn’t AT&T claim that chronic spectrum shortages would prevent it from providing reliable service, or what that a red herring (or lie) to support its acquisition of T-Mobile?

            More fundamentally, does a change in baseline technology and medium eliminate the need for government oversight?  Exactly what does this shift do to the level of marketplace competition in basic and enhanced services?