If there’s one thing AT&T loves to talk about, it’s how government regulations designed to protect consumers are really annoying.
In particular, the company says that century-old rules designed to spread phone service to all Americans should be eliminated as the country moves from traditional phone lines to all-IP (Internet Protocol) networks, a transition AT&T wants to see happen by 2018 or 2020.
The company’s latest attempt to sway public opinion toward its anti-regulation views comes in the form of research by the Internet Innovation Alliance, which is bankrolled in part by AT&T and consistently pushes AT&T’s agenda. The group previously extolled the “positive effects” for consumers of an AT&T/T-Mobile merger, a deal blocked by the federal government’s antitrust authorities. This week, the group pushed out a report titled “Telecommunications competition: the infrastructure-investment race,” by Georgetown professor Anna-Maria Kovacs. The report’s findings are proof that regulation is bad for the broadband market, the Alliance argued.
“In the report, Dr. Kovacs finds that outdated regulations that force companies to build and maintain obsolete copper-based legacy telephone networks are unnecessarily diverting investment away from modern broadband networks and services that 95% of U.S. households prefer, desire and use,” the group’s press release says (emphasis theirs).
Most US consumers “rely on the use of smart wireless devices, cellphones, wired Internet-enabled VoIP services, and over-the-top Internet-enabled applications (i.e., Skype), far more than on traditional telephony to stay connected in today’s digital age,” the alliance continues. “99% of all US communications traffic is now carried over these platforms in Internet Protocol, while legacy circuit-switched traffic is now less than 1% of traffic and likely to further decrease to a small fraction of 1% by 2017. Additionally, at year-end 2012, 38% of Americans relied on wireless exclusively, 4% relied on VoIP exclusively and only 5% relied on traditional plain-old-telephony (POTS) exclusively. Another 53% relied on wireless in combination with either POTS (29%) or VoIP (24%).”
More than half the $154 billion spent on communications networks between 2006 to 2011 went to “maintaining fading legacy networks, leaving less than half to upgrade and expand their high-speed broadband networks.” The upshot is that “outdated regulations are unnecessarily diverting investment from broadband.”
The AT&T-funded group’s report comes down heavily on copper-based networks, saying the regulations designed for them are often “technologically inapplicable” to fiber-based IP networks.
Like it or not, regulation protects consumers
Expanding fiber access is a worthy goal, of course. But many Americans still rely on copper-based DSL for Internet access, and telecoms have proven themselves uninterested in replacing copper with fiber in all parts of the country. After Hurricane Sandy wiped out phone service in parts of Fire Island, Verizon’s solution was to abandon its traditional phone lines and replace them with wireless-only service that residents complained was worse than what they had before the storm. After complaints from the New York Attorney General that the company was trying to “depart from a century of telephone service regulation,” Verizon caved in and agreed to deploy fiber.
The victory for consumers demonstrated the importance of regulatory oversight. But the concerns about reliability and battery life of wireless replacements for copper were dismissed by the Internet Innovation Alliance report.
“Regulators and consumer advocates who still cling to copper as the solution for power outages do nothing for the 60+% of consumers who have chosen to not have a POTS line in their home,” the report said. “And, of course, copper cannot provide service when the central office itself is put out of commission by flooding, or when the lines are cut by a storm.”
Telecom analyst Bruce Kushnick took to the comments of a Washington Post article to call out distortions in Kovacs’ research. He noted that TV and Internet service often ride over the old POTS lines. “The spending on POTS is really maintaining the wires for all services using these old copper networks,” Kushnick wrote.
The analyst also added some context to the assertion that only 5 percent of people rely on POTS exclusively. That number “only counts residential voice calling,” he wrote. “18% of households in the US have an alarm circuit and the overwhelming majority of lines are copper, but are not counted. DSL in the households are also not counted even though it’s based on the old ‘technology.’ And in the small business area, everything from fax lines or other data lines like ATM machines or credit card processing—almost all using copper wires—were not counted.”
The anti-regulation study comes a month after AT&T Senior VP Jim Cicconi argued that the Federal Communications Commission’s authority should be curtailed.
“I have said to folks repeatedly that as we move to an all-IP world, AT&T understands that we are not moving into a regulation-free zone,” Cicconi wrote. “We get that. But it would be just plain dumb to take regulations designed for a monopoly Bell System and try to apply them to modern, competitive Internet communications.”
More specifically, the FCC should “allow companies to retire the legacy technologies and services upon which its traditional regulatory authority is based,” he argued.
“Instead of ditching all the old rules, we’ve got to think, ‘What do we want to keep?'”
There’s no doubt traditional phone lines have been willingly abandoned by many Americans. AT&T reports serving 13.9 million POTS access lines, while Verizon reports serving 7.2 million, Cicconi wrote. “In Florida and Michigan—two states in our wireline footprint—only about 15% of homes are still connected to the POTS network,” he wrote.
Old technology inevitably gets replaced with new technology. But the transition is bound to be slow in some places, especially rural ones where telecoms may not see much of a financial opportunity or sparsely populated areas hit by natural disasters.
As we move to all-IP networks, consumer advocates rightly ask that telecoms still be required to provide baseline levels of service. In the case of Fire Island, without regulatory oversight “nothing would have stopped Verizon from rolling out whatever service they thought ‘good enough’ for a local community with no other provider,” Public Knowledge Senior VP Harold Feld wrote last month.
The Internet market already suffers from a lack of competition that could be exacerbated by a loss of regulation, according to no less an authority than Vint Cerf, co-creator of the Internet Protocol. “If no regulation leads to your loss of choice of access to applications and content, then that is not an acceptable outcome,” Cerf told Ars last year. “If that’s what the telcos are trying to accomplish, I am opposed. If all they’re trying to accomplish is to make sure the Internet stays as widely open as possible and they are willing to provide competitive access and give us choice, that’s another story.”