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.
In this area I have had the same copper based landline for over 20 years. It has been 'out' exactly once when someone ran into the pylon. (the lines are buried). Cellular outages, malfunctions, billing errors, connectivity problems have been too numerous to count in just half that time, and the cost has gone up for equipment and services, not down, with less reliability since the switch to digital, not more.
A lot depends on where you live, and if you are not far from a sidewalk, cellular might work for you.
Keep in mind that DUH1 was elected primarily by urban people, and from just a few of the policies being floated since the ballots were counted, rural folks had better batten down the hatches for the sh*tstorm of anti-rural policies coming down the pike.
This is an orchestrated PR campaign to provide the telco lobbyists with media cover for the next round of $200 billion (plus inflation indexing) of taxpayer funded subsidies to the dominant telco and cableco duopoly.
END the universal service fund. But no one in Washington can or will do that, of course.
I never use a cell phone, period. I despise those damn things -- they're so intrusive. I hate listening to giggly teenagers' conversations.
“Probably better for your brain cells. This is the big problem with digital wireless.”
You have a mental problem, you probably are spooked by living under high tension power lines also!
I guess you've never had the privilege of living out in the country. No cable or DSL out here. I could go satellite for high speed Internet access, but it's very expensive and pretty unreliable. Nice and peaceful though.
We still have a land line only because of DSL.
We almost never use it for voice. I would use cable, but I need my bandwidth every time I use the internet. I can’t handle slow downs when the school kids in the neighborhood get home and start downloading movies, ect. I also hate Comcast.
That's dumb as well.
you see someone being attacked outside ... you SHOOT them.
Sounds like a great product liability case!
With over 10,000 hours of wearing a head set in an aircraft i’m not only not going to worry about it but consider it junk science!
I think headsets are wired to the radio?
They work off of electro magnets in each ear piece.
ok ok...so you see someone get a heart attack. You don’t want to shoot him. You want to call 911 on your cell phone!
you do what you have to do for national infrastructure. Better to spend $100 billion on universal broadband than all those other things in those ‘stimulus’ packages.
We agree on national infrastructure being a worthy outlay, even if it means in the end massive profit increases to the porn industry.
We’ve already been soaked for over $210 billion for universal broadband initiatives. There was never oversight because telco lobbyists wrote the bills, the Congress was bought like cheap whores, and now that the Dems control the country telcos and cablecos are anteing up for another $100 billion in free unaccountable money.
I freakin’ hate talking to someone who’s using a cell phone—and when they are not fluent in English and using a cell phone, it’s even worse!
When I have to make an important call, I always use my old-fashiond, but clear as a bell, landline for it; I sure would not want to annoy the important person I’m talking to.
Sorry, but there are places where cell phones are simply not up to speed. My house for example, where neither cell nor cable can be received. My office, for another example where I can get cable but for some unknown reason, everyone has to go to the parking lot for cell phone reception.
It has made programming my IPhone and my 3G difficult, and my third cell phone stinks.
I can depend on my two land lines at home, and my landlines at work work wonderfully well, and are very clear and never cut out.
the govt needs to be completely reformed before it can be trusted on any major undertaking. The govt tries to do so many things poorly instead of doing a few things well.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.