You'll have to pry my dial up internet from my cold dead hands . Bill Slowsky is my hero.
Posted on 11/18/2008 8:34:01 PM PST by Kukai
By the end of President Obama's first term, there won't be any more copper landlines left in the country. One of the challenges facing the Federal Communications Commission and the new administration is how to deal with the fallout from the end of this venerable technology. It's gonna get ugly for some people – people who can't afford to do without communication – unless we're proactive about this problem.
Here's what's happening, as you probably know. Young people don't bother with landlines (unless they live beyond cell coverage); they just use their mobile phones or Skype for voice communication. The slightly older set are buying cable's bundle of entertainment, Internet access, and VoIP. They cancel their landlines. People who have broadband access don't need the extra line they used to rent for their dial-up Internet access.
Verizon (VZ) simply sold all of its copper plant in the three northern New England States to FairPoint (FRP). Verizon hadn't been investing in this plant and didn't want to put any more money in going forward. FairPoint, like Verizon and AT&T (T), is losing access lines. In its latest financial results, it reported that access line equivalents are down 9.2% over the past year; total revenue is down as well.
In prime markets Verizon is replacing its copper infrastructure with fiber – one customer at a time; first are the most valuable customers, but Verizon will move steadily down-market with its FiOS offer. FairPoint is making an impressive effort to add broadband access to areas where Verizon had not invested enough to make DSL work. FairPoint has also shown commendable willingness to move beyond traditional copper and use wireless to reach customers out of range of DSL. To compete with Cable's triple play, FairPoint has a loose bundle with DirecTV (DTV).
So look through the data points above to the trends. Revenue from POTS (Plain Old Telephone Service) is simply disappearing. The copper network is generating increasing revenue from DSL , but cable appears to be winning the bandwidth war for Internet access and snaring the voice customers as well. Barring a technical breakthrough in the use of the copper infrastructure (one should NEVER bar a technical breakthrough), there are going to be less and less copper access line in use. In the long term, this isn't a problem because there are better ways to communicate than over fixed copper wire. But we live now, not in the long term.
There are several public policy problems stemming from the decline of the copper network:
At some point the carriers, starting with some of the medium sized ones like FairPoint, aren't going to be able to afford to maintain these networks with too few users. Network maintenance costs don't go down nearly as fast as the number of lines since you can't abandon any trunks as long as there are any customers attached to them. You still have to fix the lines when a tree falls on them even if most of the copper pairs in them are not in use. That's a big deal. Revenue for the Universal Service Fund is still predicated on the good old days when everyone used a landline. Cellular customers get a break. VoIP is a gray area. The USF will run out of money at a time when it may be getting more expensive to provide basic service to people in rural areas. The small rural carriers survive because of subsidies from both the USF and termination charges (which disappear when people don't use their landline phones). The USF mainly funds POTS. If POTS is kaput, there's nothing to subsidize. All of these problems can be solved if they're recognized in time and if there's the political willpower to overcome the interests of those who have a stake in prolonging the declining status quo and postponing the future. For example, small rural telcos like the subsidies they get today and are not in as much immediate danger as their less-subsidized mid-sized brethren; they have substantial political clout with state and federal regulators. The duopoly of one large telco and one large cableco serving each area has resulted in some competition, but not enough to stop Americans from having less bandwidth available at a higher price than most other developed countries. The duopoly has lobbyists to put it mildly.
The solution – at a high level – is breathtakingly simple. By the end of Obama's first term, everyone in the US who has phone service today needs to have both an inexpensive mobile phone and broadband access (in some cases that'll be through the same device). The USF needs to shift its mission from subsidizing POTS to subsidizing connectivity. USF subsidies should go to consumers who are unable to pay for basic connectivity; not to telecommunications providers (rich people with homes in rural areas don't need an indirect subsidy; poor consumers should be able to choose which service provider to give their subsidy to). The revenue source for the USF either needs to move to the general tax base (good policy but bad politics) or at least be broadly based across telecommunications services. There will need to be public investment in telecom infrastructure in rural areas, but that may well be fundable by revenue bonds that get repaid from use rather than taxes; that's what we're planning in Vermont.
Do all that and the telecommunications future'll be bright. The cost of providing telecommunications is gonna come down very fast. More on that in an upcoming post.
Very misleading title. And no, not because it has Obama in it.
There is no way POTS Copper lines dissapear in the next 4 to 8 years.
They will dissapear, no doubt, but in about 20 years. This country covers a continent and many locations will not get fiber or cable for decades to come.
If you dont believe me, try getting wireless service (much less 3G)in about half of Wyoming
I can’t believe ANYONE still has a land line. Talk about dinosaur technology!
Never happen.
You’ll never get me copper!
You'll have to pry my dial up internet from my cold dead hands . Bill Slowsky is my hero.
We haven’t used a land line since 2005.
I can't believe people make 911 calls, or risk their conversations being overheard/recorded all the time, on cell phones.
There will need to be public investment in telecom infrastructure in rural areas
it’s a wonderful idea but we won’t be able to afford it thanks to the govt spending all this money on all kinds of other stupid things.
I never use my cell phone when I can use a real telephone.
Let me guess. There will have to be a government program to make sure “poor” people get a free cell phone (even though most of them already have at least one, plus all sorts of other electronic goodies), with the costs tacked on to our bills in the form of a misleadingly named tax.
I'm still waiting for copper DSL which was supposed to be available here about 2002.
” that’s what we’re planning in Vermont. “
That tells me it’s not going to happen!
I think that the sound quality on cellular phones is inferior to that of land lines. Cell phones are great because they are portable, but until/unless they get the tonal quality problems solved on cell phones, it’s hard to believe that land lines will just disappear.
I can’t believe people make 911 calls, or risk their conversations being overheard/recorded all the time, on cell phones.
you see someone being attacked outside...”oh lemme run back home to call 911”
Why is Obama a benchmark here? This is the inevitable march of technology, not some policy. This is some sort of ODS.
Huh? I love mine and my dsl service. I hate cell phones. They always cut out, fade out, may get one for an emergency. My land line is so reliable and talking to people on cells that cut out, cut off, batteries go dead, and people driving (I usually ask them not to talk long) is annoying.
Plus they haven't been proven not to cause cancer. I guess current warnings are more confined to kids, but if you think this is tinfoil stuff, just google cell phones cancer and see what credible links come up. Haaretz, msnbc, Telegraph, etc.
. . . in the early 1990's . . . every Bell company . . . made commitments to rewire America, state by state. Fiber optic wires would replace the 100-year old copper wiring. The push caused techno-frenzy of major proportions. By 2006, 86 million households should have had a service capable of 45 Mbps in both directions . . . In order to pay for these upgrades, in state after state, the public service commissions and state legislatures acquiesced to the Bells' promises by removing the constraints on the Bells' profits as well as gave other financial perks . . . The phone companies collected over $200 billion in higher phone rates and tax perks, about $2000 per household.
Technorati Tags: AT&T, Broadband, BruceKushnick, BellSouth, Qwest, Regulatorium, SBC, Telco, Verizon
PermaLink // posted by isen @ 7:11 AM // email
this
New investigative ebook offers micro-history of Verizon, SBC, Qwest, and BellSouth’s (the Bell companies) fiber optic broadband promises and the consequence harms to America’s economic growth because they never delivered and kept most of the money, about $200 billion.
New York: This is one of the largest scandals in American history. America is 16th in the world in broadband and the US DSL current offerings are 100 times slower than other countries such has Japan and Korea. How did we go from Number 1 in the web to 16th in broadband and falling?
But more importantly, are customers owed $2000 for a fiber optic service they paid for but never received? Did towns and cities, libraries and schools, government agencies, and every residential and business customer subsidize new networks that never showed up?
And did America lose $5 trillion in economic growth, $500 billion annually, because of these missing networks?
Broadband Scandals is a well-documented expose, 406 pages and 528 footnotes. Using the phone companies' own words (and well as other sources), the book outlines a massive nationwide scandal that affects every aspect of state of the Internet. Not only the web but broadband, municipalities laying fiber or building wifi networks, not to mention related issues such as such as VOIP, cable services, the cost of local phone service, net neutrality, the new digital divide, and even America's economic growth.
The fiber optic infrastructure you paid for was never delivered.
Starting in the early 1990's, with a push from the Clinton-Gore Administration’s "Information Superhighway", every Bell company — SBC, Verizon, BellSouth and Qwest — made commitments to rewire America, state by state. Fiber optic wires would replace the 100-year old copper wiring. The push caused techno-frenzy of major proportions. By 2006, 86 million households should have had a service capable of 45 Mbps in both directions, (to and from the customer) could handle over 500 channels of high quality video and be deployed in rural, urban and suburban areas equally. And these networks were open to ALL competition.
In order to pay for these upgrades, in state after state, the public service commissions and state legislatures acquiesced to the Bells’ promises by removing the constraints on the Bells’ profits as well as gave other financial perks. They were able to print money — billions of dollars per state — all collected in the form of higher phone rates and tax perks. (Note: each state is different.)
* ADSL is not what was promised and paid for. It goes over the old copper wiring, can’t achieve the speed, has problems in rural areas and is mostly one-way.
* 0% of the Bell companies’ customers have 45 Mbps residential services.
Harms and Outcomes
This investigative book isn’t just a history, but a warning — the Bell companies can not be trusted with our digital future. Worse, what they have done has resulted in serious repercussions to local, state and national economy.
* The public subsidies for infrastructure were pocketed. The phone companies collected over $200 billion in higher phone rates and tax perks, about $2000 per household.
* The World is Laughing at US. Korea and Japan have 100 Mbps services as standard, and America could have been Number One had the phone companies actually delivered. Instead, we are 16th in broadband and falling in technology dominance.
* Harm to the economy. Five trillion dollars was lost because new technologies and services that America would have developed, happened in Korea.
* Municipalities around America are waking up to the fact that the phone companies failed to deliver and are now doing Wifi and fiber-based work-arounds.
Broadband Scandals delivers serious revelations. In fact, the book has been designed as the data source for Teletruth’s complaint to the FTC against SBC and Verizon.
* The promised networks couldn’t be built in 1993 and state laws were changed based on "deceptive speech". The technology today still has problems delivering 500 channels.
* The phone companies pulled a bait and switch. In order to offer DSL over copper, it was not necessary to have state regulation changed. Their plan was to get rid of regulations and enter long distance.
* The Bell mergers resulted in the death of the state plans for fiber optic broadband. Over 26 states had fiber optic projects closed when the mergers of SBC and Verizon were completed. That affected almost 80% of all phone customers in the US.
Broadband Scandal contains some additional special chapters.
* 20th Anniversary Summary of the Bells’ Financials. The core of the book is a 20-year analysis of revenues, profits, construction, etc.. Starting in1984, their own data shows revenues up 128%, and concludes profits shot through the roof on the promise of broadband. Meanwhile, compared to revenues, employees are down 65%, construction down 60%. Why did prices increase?
* Case Studies: New Jersey, California, Massachusetts, and Pennsylvania. — State-by-state the book outlines the same pattern of deception. By 2010, 100% of New Jersey is supposed to have 45 Mbps service; by 2000, California should have had 5.5 million homes completed, and each state paid billions for services they never received.
* Verizon’s "FIASCO" and SBC’s’ "Dim-Speed" — Verizon and SBC are rolling out new fiber optic services but want the laws changed again. These services are crippled, closed networks that do not fulfill the state obligations, like New Jersey and can’t compete globally. FIOS’s top speed is only 35% of the Asian standard, and yet it cost $199 vs Korea, $40 for 100 Mbps.
* Fake and co-opted consumer groups, biased non-profit think tanks are now the major force in broadband regulation and policy. The book goes into groups like Consumers for Cable Choice, TRAC, APT, Issue Dynamics and New Millennium Council and how these groups are attempting to block municipalities from offering new services to harming new services, like VOIP. These groups are sending out deceptive messages that make the formulation of the policy that is in the public interest impossible.
Broadband Scandal’s conclusion: Publicly paid for infrastructure is being held hostage and needs to be freed. Customers funded the fiber optic networks and the Public Switched Telephone Networks (PSTN) should be opened to ALL competition with strict rules of Net Neutrality. The Bells have harmed America’s economic growth and our global competitiveness. Investigations into all of the monies collected in the name of fiber optic broadband in America should start immediately. These investigations should include how the Bells improperly funded their DSL and long distance rollouts. The Bells should be forced into refunds or giving the money to municipalities. This would be a better solution than allowing the companies who have harmed our digital future to control America’s digital destiny.
Author. According to Broadband Reports: "Bruce Kushnick has been dubbed everything from the 'Leading Visionary in the Telecom Industry' to a 'Phone Bill Fanatic'; but what's certain is that nobody in the industry is ignoring him." Kushnick has been a telecom analyst for 24 years, and is one of the founders of Teletruth, an independent customer advocacy group focusing on broadband and telecom issues, as well as executive director of New Networks Institute, a market research firm.
Teletruth was a member of the FCC Consumer Advisory Committee in 2003-2004 and has active cases with the IRS, FCC and FTC pertaining to broadband and the cost of the networks. Research through Teletruth's phone bill auditing services has led to class action suits and major refunds for phone bill overcharging,
Reporters and reviewers, email us for a complimentary copy.
For a Table of Contents, roadmap, a chapter, the introduction, and more...
http://www.newnetworks.com/broadbandscandals.htm
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