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Voices


On Thursday, the Federal Communications Commission voted unanimously to begin the orderly shutdown of the old wireline telephone network.

The time has certainly come. Americans are rushing to cut the cord to the once-ubiquitous analog network in favor of better and cheaper Internet-based voice services from providers large and small.

That’s the kind of innovation Accenture’s Paul Nunes and I call a “Big Bang Disruptor,” so named because of its devastating impact on a once-dominant technology and the businesses that offered it. In 2003, more than 90 percent of U.S. homes had a wireline connection. Today, it’s 26 percent. Bang!

The old network, required as a matter of law to continue operating, is now an expensive white elephant. Once invaluable assets have quickly becoming liabilities, pulling the wireline phone business into an economic black hole. If nothing else, the eventual transition to all-IP voice services for all Americans — perhaps by the end of the decade — will end the waste of maintaining worse and more expensive analog technologies, freeing up private capital better used for improvements to their digital replacements, wired and wireless.

But there’s a more urgent reason to encourage and accelerate the so-called IP transition. Doing so will definitively close what’s left of the “digital divide” that separates those enjoying the benefits of broadband Internet from those who don’t.

Source: Pew Internet and American Life Project (as of May 2013)

Source: Pew Internet and American Life Project (as of May 2013)

Who are the Internet have-nots? The answer may surprise you. According to the Pew Internet Project, nearly half of the 15 percent of American adults who don’t use the Internet are 65 or older. (Other factors, including sex, race, income and geographic location are less significant, and continue to decline.)

That number lines up nearly perfectly with the percentage of older Americans — between 10 percent and 20 percent of them — who, according to numbers reported by AARP, still rely exclusively on the analog phone network.

The eventual shutdown of the phone network, in other words, will close the digital divide for older Americans, at least for voice. And once the holdouts have gotten over their understandable resistance to better and cheaper new technology, helping them appreciate the value of the rest of the Internet — in health care, in continuing education, in home automation, in social, public safety, energy and entertainment services, among others — will be that much easier.

It is also essential. According to the Pew survey, the most frequent answer given by non-users as their primary reason not to connect is that the Internet is “just not relevant to them.” The next-biggest factor is usability. The problem, in other words, isn’t availability or cost. They simply don’t believe there’s anything online for them. And they lack the ability to discover otherwise.

Last year, in testimony before the Senate Commerce Committee, I argued that these findings offer the most compelling reason of all to transition the dwindling number of wireline users to the Internet as quickly as possible.

While critics of the proposed shutdown (largely local and rural phone companies) warned of the risk of leaving behind the dwindling number of households that still rely solely on the analog network, the reality is precisely the opposite.

Getting the last 25 percent of predominately older Americans exclusively onto IP networks sooner rather than later will make it easier and less expensive for them to connect to other broadband services, including video, email and Web access. Which, thanks to the economic magic known as network effects, means a more diverse, valuable and robust online experience for everyone.

To be sure, there remain tricky engineering and business issues to be resolved, including emergency services and the incompatibility of older analog devices (some fax machines and phone-activated security gates, for example) that weren’t designed to work on digital networks.

That’s why the FCC is wise to begin the process with voluntary consumer trials in specific geographic markets. The trials will surface the remaining issues, including regulatory roadblocks and consumer education, which will need to be solved before a full transition can be scheduled.

But time is of the essence. Before Thursday’s order, the FCC had been considering the trials for over a year. In the meantime, the pace of consumer defection from the old network has accelerated. It’s becoming increasingly difficult and expensive to maintain last century’s technology.

The 2009 shutdown of analog broadcast television in favor of its digital disruptor offers important lessons the FCC would be wise to heed. After only four years of planning, broadcasters managed to complete the transition, but still lost most of their remaining market share to cable, satellite and, increasingly, better and cheaper Internet-based video services. Many stations have found it difficult to use new digital platforms to compete effectively. As over-the-air broadcasters start to throw in the towel, consumers lose local content and competition suffers.

For engineers, consumers and regulators alike, nothing motivates like a deadline. So, in the inevitable shift to all-digital voice services, the best way to finish what customers have already started is to set an aggressive target date and stick to it.

In the short term, that may unsettle some older Americans. But more quickly than anyone can imagine, they’ll get over it and enrich our lives by bringing their absent voices to the digital conversation.

Larry Downes is co-author, with Paul Nunes, of “Big Bang Disruption: Strategy in the Age of Devastating Innovation” (Portfolio 2014). Reach him @larrydownes.



10 comments
NOYB
NOYB

Internet phone still sux!  It breaks up, and many times you get one-way audio, and many times the calls don't complete.  Also, the internet still has NATs all over the place to contend with that really make peer-to-peer calling impossible.  It is not time yet. 

bruce kushnick
bruce kushnick

The embarrassment of bad data

It amazes me when an analyst decides to simply pick and choose data to come up with that familiar equation --- Garbage in Equals Garbage Out.

Let's be specific, shall we?

AT&T's entire U-Verse network is copper to the home... that's right copper -- that old Public Switched Telephone Network, the PSTN, where AT&T pulled a massive bait and switch over a few decades and instead of upgrading the networks to fiber optics, replacing the old copper wires,
 

AT&T decided it was simpler to stick a box in the neighborhood and run fiber, even if that is 1/2 mile away.

And the rest of AT&T's 22 states is almost all COPPER.... duh. 

And more expensive to maintain? Really, when it's the same exact copper network?

So, all those lines that they are losing -- they simply reclassify them as something else and wow-- all those lines are suddenly gone from the accounting. We're not arguing that many dropped lines for cell phone service, especially when the cost of the land line became prohibitive, but truth is the access line accounting leaves out the majority of lines, known as special access-- which include most of the data lines in America.

 
In fact, of AT&T's 76 million 'locations', only 5.5 million have U-Verse TV. -- and maybe by 2016 they'll have less around 40% coverage -- harming 22 states' customers.

No, this  'closing the networks for IP"  is a plan to get rid of regulations and oversight, which Downes doesn't bother to address.

Oh, but what about the 'wireless only' numbers? -- The Center for Disease Control's (CDC) numbers don't bother to count the lines in customer homes that  are data -- they only count residential, voice only lines. No broadband, DSL, Internet, cable, alarm circuits. Bur the kicker -- they don't include ANY  BUSINESS LINES LARRY...none. No ATM machines, no credit card processing, no alarms, no... you get the idea.

In fact, other surveys are showing that only 5-10%  don't have a wire in their business... Oops.

Then we have Verizon, where they also have 5+ million TV home wired with fiber-- but, oh that means that the other 27 million customers are STILL USING COPPER. -- the majority...

Larry didn't bother to mention that since the 1990's state laws were changed to fund upgrades of the utility networks to all fiber networks -- and customers  paid about $380 billion dollars for these networks.  

By 2010, New Jersey should have 100% of the network capable of 45 Mbps in both direction,
SNET, CT was also to be finished by 2007.

Shame Downes didn't bother to cross-reference his stats with the facts.

vdev
vdev

As several have pointed out, what we're talking about here is neither a single nor simple transition. 


One relates to the transition from wired (typically copper) to wireless local distribution (not the same as cell/mobile phones). A second addresses wither the long-haul network is circuit/TDM-switched or IP-based (this seems to be the focus of the recent FCC activity). A third relates to the responsibilities of ILECs and availability of services such as DSL.


It's no secret that both Verizon and AT&T are trying to get rid of copper. As part of that, they're also trying to move from regulated (subject to ILEC rules) to unregulated service. These two things are not the same but both companies are trying to sell regulators on both on the basis of cost-benefits of (i). It will be a sad mistake if they fall for this.


For the most part, it should not matter HOW the local company delivers phone service and long as it's reliable and supports the required capabilities. It could be cable, could be old-style copper, or fibre or wireless -- if it does what is required then that's good (some will argue about power from central office but I choose to set that aside for now). But ILECs are trying to say that if we switch from copper to something else then we're unregulated. THAT is the core issue, in my mind. 

fgebhart
fgebhart

Nice theory, but shut down the phone lines and you shut down DSL connections. For those of us in areas where DSL over copper is the *only* internet access choice, you just kicked us into the dark ages.

bobsulli
bobsulli

And what if they are WANT-NOTS instead of HAVE-NOTS, living their lives on the analog side of the "digital divide" because that's where they want to be? I don't see WANT-NOTS taking kindly to what is expressed primarily in terms of a balance sheet argument (i.e., what were assets are now liabilities).

The impact of losing telephone access is clearly more significant than losing TV access. Though you note well the issues in the analog to digital TV conversion, you glossed over the issues for the analog to digital telephone conversion. 

I am by no means a Luddite, but I see little evidence that the voice of those on the other side has been heard and their concerns addressed before this "inevitable" march begins. 




Doge
Doge

the problem is not that VoIP and FoIP does not work via a ip netork. its that its not that reliable. in order to shut down the  ptsn network. telecom companies need to provide 5 nines reliability. this is something voip does not offer. this could be solved by using AON, but that is expensive so telecom providers would rather use PON on the ONT with a BBU that is connected to the local utility at the owners expense

WisdomSeed
WisdomSeed

The analog/digital conversion did and did not work. In Chicago, WBBM the CBS affiliate was lost by at least 50%, if not more, of those converting. A search on 'lost channel 2' will give you an opening into the mess that made. While I am all for moving to digital, we need to have some checks and balances in the process, like for instance the price of high speed wireless in Chicago by Xfinity is about $75 a month. Even then the speeds top out at about 25g per second. It would be nice if the price for high speed came to within reach. While AT&T does offer its high speed at $30 it never gets faster than 5-7gb. We really need to work on a replacement infrastructure that is up, running and affordable before we eliminate anything. Maybe it is time to consider taking the spectrum back from the for profit industry and making it part of the public good where it belongs. 

Richard Bennett
Richard Bennett

@bruce kushnick Not so much, Mr. Kushnick. The PSTN in the US features 20,000 foot cable runs, and as we all know, speed degrades with distance for all media, even fiber. When AT&T install VDLS2+, they reduce the copper run to 2,500 feet or less, and backhaul with fiber. This allows then to provide each connection with 25-50 Mbps, depending on pair bonding and adjacent channel noise. This is more than enough bandwidht to handle all the Internet has to offer. Compare it to the 160 Mbps cable offers where 200-300 homes share a channel and you'll see how shiny it is.

There's no reason for 99% of residential users to demand a much more expensive FTTH connection when this technology is available, and it meets your demand for 45 Mbps (T3 grade) connection quite nicely. 

As for reliability, it's certainly true that a hyrbrid copper/fiber system is indeed more robust than the all-copper alternative. 

If you're going to bash people for not presenting the facts, maybe it would behoove you to study telecom technology a bit yourself. Might be less embarrassing. 

Doge
Doge

@WisdomSeed the wireless service that comcrap provides is actually provided by  Verizon

Doge
Doge

@WisdomSeed comcrap always offers a lowerspeed. that's why its "UP TO" 50mbps. the reason they use the Xfinity moniker is because people started calling Comcast comcrap

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