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.
A few points:
Cable will never fully defeat DSL, mainly because of business customers. Simply put, a business location is much more likely to have telephones than TV’s.
Those aformentioned businesses are not going to buy cellular service for every desk in the office when they can leverage a handful of landlines into an internal phone system capable of sharing the outside connections. land line phones also generally run on power provided by that land line as opposed to limited battery life, so for desk-bound locations cell phones make absolutely no sense.
Some businesses may be well suited to VOIP phone systems, but it is by no means a good fit for all or even most of them. And many that would benefit from it would do better to use it as their internal phone system and still use POTS lines for external calls.
Go to your local shopping mall and you will find that most of the stores have POS systems that communicate back to their home office. They are almost certain to have a DSL connection for it. It would not make sense for them to buy that DSL line and not use the same LEC for voice.
Land line telephones flat out sound better and last longer than cell phones, and VOIP carries its own host of expensive drawbacks.
As long as there are business customers, copper is not going away.
HEY! Watch it! I’m still running copper here with POTS and DSL over it. It just works. I had ISDN before DSL with two bonded B channels for 128 kbps way before DSL, too. The costs were horrendous with two simultaneous metered calls to a nearby exchange.
When the power goes out, my indestructable Princess touch-tone phone and copper land line still work. No charging required!
In Houston 2 months ago, the power was out for 3days-4weeks. This was a major city. Those with cellphones were SOL to keep their phones charged and even if they worked, there was no guaranty that the towers would work or that there would be sufficient lines.
But land lines did reasonably well. There were some outages caused by hurricane Ike but the lines did serve a purpose.
Digital tv was **** as the storm blew through too. What are we going to do? Have battery powered digital receivers for battery powered radios/tv audio/weather in an emergency? Ever listen to a digital signal that is cutting in and out because of bad weather? You at least stand a chance at hearing the signal when there is static cutting in over it. Not so when a digital receiver has to “resync”.
And those rechargable cars are going to suck in the next hurricane too.
But that’s okay, we now permit the police department to establish a curfew even though it is SUPPOSED to be the jurisdiction of the mayor.
Really?
I do.
I also have a cell = however, where I live, storms often knock out electricity. Sometimes it's only hours, sometimes a day or two - but in the '98 Ice Storm, I was without electricity for 19 days. Everything was coated with ice. trees were down everywhere - including across my drive. It was too dangerous to go anywhere.
With my wood stove, I stayed warm and could heat water and cook.
With my land line, I had access to the 'outside' - crucial in an emergency. My cell soon ran out of juice...To recharge it over and over in the car for 19 days would have been a nightmare...even had the gas lasted.
So I guess I'm a dinosaur = but one who rests easy knowing I can reach the outside world from my little forest home. 'Very comforting for an old granny.
Of course, a lib would just think: "Well, granny ought to be in a retirement home or an assisted living place or some other gov't run scheme to bleed people of their last dollars/
Until they get cell phones to keep a charge for an extended time and or have an independent of electricity or car recharger, they need to leave people with access to the outside.
Some recent immigrants will gladly remove that copper and take it in to the recycling center.
You must assimilate to the new technology. You aren’t supposed to speak of the limitations and failures of the digital world, whether it is substandard compression and artifacting on DVDs, digital television, dropout in telecommunications, or whatever.
By a new phone. You can play P!nk on it and be hip. Or play the new Jay-Z Obama theme song.
As for corporations, they can talk through the internet.
And all of this digital communication can be processed/monitored much easier.
In the late 70’s some prophetic(or pathetic)industry reps. proclaimed that within 4 years all cars would have CB radios as standard equipment.
Even worse in Alaska - no copper, no phone.
One of the local ILECs is selling nakid DSL - you need a cell phone (an account really) to ge the service. At least they are trying to milk the last possible dime out of plant that was installed 20 to 30 years ago.
IF there is no current running thru the line (wet) all of the splice rot and the line is dead. ILECs will not replace the plant and CLECs would rather sell you a cable based link.
ME? I have all 3, but then I woked in the industry for a numbers of years.
For real emergencies, the family all have ham licenses....
There is also an issue sending FAX. It works fine over copper pairs. Not so well over other media. Many cell phones purport to be able to support FAX. The AT command sets have lots of "support". They don't work reliably. My fallback is to scan to PDF and e-mail the file. The quality is better and the transmission is faster.
Audio headsets are not a hazard. A cell phone transmits RF at 800 MHz and/or 1.9 GHz. You're shoving a hot transmitter next to your head. There's a reason why handset manufacturers have to pass "SAR" standards. The effects on brain activity are measurable. The jury is still out of how much is too much.
I operate a small Linux server that is connected to the net over a land line with DSL.
Just happens to be the cheapest thing out there.
I went through the same process, but opted for just 1 B channel until the DSL over a dedicated pair was offered. A couple years later, the first DSL that could operate on top of a voice line was introduced. I still have my 1996 vintage ISDN terminal adapter in a box.
I can't believe anyone who cares about voice quality would use anything else.
I work out of an office in my home. All of my phone time is spent either selling my products to prospective customers, or trouble-shooting the technical problems of existing customers. Neither of these groups are willing to tolerate the drop-outs, distortion, delays, echos and other issues associated with cell or internet-based phone service.
For folks like me, there is no viable alternative to POTS.
Actually I just pull out the .38 and blast the bastards, no sense making a call.
I use a land line for several reasons, one, I can't get DSL without being hooked up to a landline, good luck if you are able to do so. I need a landline in order to phone in my pace maker signals every 3 months, beats the hell out of driving 50 miles to do it. At last but not least I use a landline because I can actually hook up with some one and not have to worry about walking to one side of the house and lose the person I am talking too. Obviously the people who use cell phones constantly do not live in an area where cell coverage is spotty.
Oh, and the part about the .38 was true, I find them much more effective in combating attacks then a cell phone. Cell phones don't cause much of a wound.
Land line is still out after IKE. Comes and goes... static mess when does come back. I like having a home phone. Cell phone reception is terrible way out in the country. But, glad to have it. Still, miss my home phone.
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