Old phone

Shutterstock

Policy


As we approach the final days of the old copper-wire telephone network, regulators are already looking at what rules to apply to new Internet-based networks that will replace it.

Today, the Federal Communications Commission is poised to allow AT&T Inc. and other phone companies to run Internet phone networks without the current rules in limited tests. Phone companies would still be required to offer consumer protections like immediate access to 911 and reliable phone quality, but they’d be allowed to experiment with how to provide those services.

“We will be focusing on how enduring network values — public safety, universal access, competition and consumer protection — can be preserved and enhanced throughout technological change,” an FCC spokesman said. There is no date set yet for ending the trials.

The tests are part of a broader effort by Washington to figure out what to do about the FCC’s archaic rules, which have strained to keep up as phone and video services have migrated to the Internet or wireless networks.

In 2003, about 93 percent of U.S. households subscribed to traditional phone service, according to USTelecom, the phone and broadband industry lobbying group. Ten years later, that figure had dropped to about 26 percent. Consumers have dumped old landlines in favor of Internet phones packaged in pay-TV companies triple-play bundles. Or they’re increasingly relying exclusively on wireless phones.

Legacy phone rules, which govern everything from dial tones to rates companies pay each other to connect calls, have looked increasingly obsolete as AT&T, Comcast Corp. and other broadband providers have moved phone services onto the Internet.

Phone companies want to shut off their old copper-line phone networks and upgrade to internet protocol-based networks, including wireless services. AT&T and Verizon Communications have been asking the FCC for years to look at this issue. The issue gained more notice last year, after some New Jersey residents complained when Verizon decided to build a wireless network to replace the old copper-wire system that Hurricane Sandy washed away.

There’s not expected to be much of a fight from phone providers about retaining existing consumer protections, like privacy rules to protect consumers’ billing info or making sure everyone can reach 911. Things get a little dicier when it comes to more expensive issues, like ensuring that everyone in the U.S. — even in ultra-rural areas — has access to reliable phone service.

The upcoming tests “will give policymakers and all stakeholders the ability to observe and learn from the facts on the ground, rather than being frozen by false fears,” AT&T said in a statement last month, when the FCC announced plans to allow the trials. “Ultimately, the IP trials will ensure that no one is left behind as the country moves forward to an Internet-enabled future.”

More contentious will be new rules about how phone companies connect with each other to transfer phone or data traffic. The FCC currently has a mind-numbing collection of rules which dictate how phone companies pay each other to complete calls. The agency hasn’t begun seriously tackling that issue yet.  The agency overhauled those rules a few years ago but hasn’t yet begun tackling the interconnection issue yet. (Update: Just clarifying the FCC’s actions so far.)

(Comcast Corp. owns NBCUniversal, which is an investor in Re/code.)




6 comments
MilesCrane
MilesCrane

Besides the photo error, the last part is wrong too - The FCC is phasing out intercarrier compensation, as detailed in the November 2011 USF/ICC Transformation Order. Intrastate rates have already dropped to interstate rates, and this July, those rates will drop by 33% a year until the phase out is complete in 2018/2020, depending on whether the company is an ILEC CLEC or RLEC. 

fgoodwin
fgoodwin

The article is about telephone service but the photo is of power poles, not telephone poles.  Do you guys know the difference?

mHealthTalk
mHealthTalk

Here are two arguments for Public Broadband. FIRST... With the Internet at the core of telehealth, telework, distance learning, e-commerce, e-banking, economic development, and national security, access SHOULD NOT be controlled by a few monopolies that can leverage control of the cabling to also gain dominant positions in adjacent businesses such as TV broadcast & streaming, music streaming, voice & video calls, cloud computing, home energy management, home health care, home security, and more. 


SECOND: As for-profit companies answering to shareholders, AT&T and Verizon make Business decisions about how much to invest in infrastructure, and that creates a Chicken v. Egg dilemma. They won't upgrade network capacity until there's enough demand for the next-generation applications that need it, but those apps can't even be developed unless enough capacity already exists with enough people accessing it. That puts our nation at a competitive disadvantage versus ones who view broadband strategically. 

AT&T and Verizon also won't install new broadband networks when market demand and profit potential is not large enough, but they don't want municipalities to do it on their own. That's why they crafted model legislation that's now been adopted in over a dozen states that bans or severely limits municipalities from installing their own broadband networks with public funds, even when they won't offer it to them themselves. That, in my view, is Restraint of Trade and cause for Antitrust or RICO action by the Justice Department. 

Which is more important, Shareholder interests or Public interests?

Amy Schatz
Amy Schatz

@fgoodwin  Apparently not. I wanted a photo of phone lines on poles, but didn't pay close enough attention when choosing that one, obviously. Do you like the new photo better? Thanks for your comment.

Follow

Get every new post delivered to your Inbox.

Join 300,846 other followers