DTV Deadline for POTS-Part 2

Posted by: Hank Hultquist on January 5, 2010 at 2:53 pm

As reported in my last blog, we recently filed comments in response to an FCC public notice on the transition from legacy networks and services to broadband. At the time, I had no idea how much interest this proceeding, and our filing, would generate. I came back from the holidays to find dozens of blog posts and articles reporting on, and in some cases “interpreting” our filing. While I understand that it might be fun to write about the phone company asking for permission to shut off telephone service, that wasn’t exactly the point of our filing.

Our filing was simply the latest in a series of filings (1, 2) that we’ve made over the last couple of years pointing out that the traditional POTS business model is in permanent and irreversible decline. AT&T is not alone in observing this trend. In fact, observers ranging from Stacey Higginbotham (Landlines are Obsolete in Less than a Generation) to the NYT (Continued decline of wireline number 3 top tech theme for 2010) have made the same point. Nor was AT&T the first to suggest a firm deadline for the transition.

Ordinarily this circumstance would be of little interest to regulators or policy wonks, but the POTS model is itself largely a creature of regulation. What I mean is that the business model of providing “basic local exchange service” (at a regulated price), plus “exchange access services” (at regulated prices), plus “long distance service” (at nationally averaged and integrated prices), plus (in some cases) explicit universal service subsidies, is at least as much the product of years of accumulated regulation as it is of supply and demand. The truth is that market forces alone would never have created this business model, and certainly would not have extended it to the low density areas that are the beneficiaries of the implicit and explicit subsidies inherent in the model.

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In a Down Economy, Let’s Not Sneeze at $20 Billion in Investments

Posted by: AT&T Blog Team on December 30, 2009 at 2:07 pm

It’s always good to first talk about where you agree with someone before discussing the areas of disagreement. In that spirit we respond to the recent blog post by Susan Crawford. There is one point that we can agree — more spectrum is needed to avoid the looming crisis that the wireless broadband industry is facing.  Kudos to the FCC for moving this problem to the front of its very full agenda. The solutions won’t be simple, but the resolution will matter to the millions of Americans who now depend on their wireless devices and millions more who will in the future.

While we see eye to eye on the need to identify more spectrum for wireless broadband, we have to question Crawford’s disapproving comments about our capital investments. In 2008, we invested more than any other publicly traded company in America and more than any other publicly traded global telecommunications company. Period. It’s baffling that she is criticizing us for not investing even more, or faster. We all should appreciate the risks any investor incurs in uncertain times…and these times are financially more difficult than most of us can recall in our lifetime.

It’s just natural that investment would go down somewhat during the greatest economic downturn since the Great Depression. But to label this as “disinvestment” is a major overstatement. AT&T still invested $20.3 billion in 2008 — again, according to Bloomberg that’s more than any other US company.

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DTV Deadline for POTS

Posted by: Hank Hultquist on December 22, 2009 at 9:52 am

Yesterday, we filed comments on the 25th public notice released by the FCC on the national broadband plan. (Not including the original notice of inquiry.)  At this point, we’re all suffering from a bit of comment fatigue, and I’m sure that includes the people at the FCC who are writing the plan. But this particular public notice is a big enough deal that I hope it draws the best ideas out there.

This time the FCC asked about the transition from legacy networks and services to broadband IP networks. While it may seem like this transition is both inevitable and well underway,  there are some significant regulatory barriers to its completion. In particular, legacy universal service and intercarrier compensation policies stand in the way of completing this transition in a timely or efficient manner. In our filing, we propose a firm deadline for the transition from the POTS business model to an IP-based broadband environment, as one of the most significant actions the FCC can take to achieve the goal of ubiquitous, affordable broadband for all Americans:

Due to technological advances, changes in consumer preference, and market forces, the question is when, not if, POTS service and the PSTN over which it is provided will become  obsolete.…the single most important feature of Commission action at this time is the establishment of a firm deadline at which point the transition will be complete, and we advise the Commission to seek comment on when that deadline should be, taking into account Commission experience in managing the transition to digital broadcasting as well as the retirement of analog cellular networks.

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FCC Proposes to Transition the Universal Service Fund

Posted by: Hank Hultquist on December 17, 2009 at 2:27 pm

The Washington Post reports today that the FCC has proposed transitioning the Universal Service Fund, which currently supports the phone network, into a 21st-century fund that supports broadband.

We think this is a great idea – in fact, 20 months ago today we filed a proposal at the FCC recommending just such a transition:

In particular, AT&T proposes that the Commission transition those mechanisms to a Broadband Incentive Fund (for fixed networks) and an Advanced Mobility Fund (for mobile wireless networks), which will collectively support the voluntary deployment and offering of broadband service in unserved areas. The plan’s defining characteristics are cost control, accountability, state participation, and infrastructure build-out in unserved areas, the very guiding principles recently identified by the [[Federal-State Joint Board [[on Universal Service, which advises the Commission]].

So a big compliment here to the FCC and its broadband team for moving down this road.  While the world of telecommunications and how consumers use these services has changed, the USF hasn’t.  It’s still predominantly used to finance Plain Old Telephone Service.  Everyone recognizes that the fund and how it’s administered is broken and needs to be fixed.  Now, it’s time to move towards restructuring the USF to bring broadband access to those who are currently not served, in areas in which competitive market forces alone have been insufficient to achieve rapid broadband deployment.

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FCC’s Open Internet Rulemaking: A Way Forward

Posted by: Jim Cicconi on December 15, 2009 at 5:29 pm

Whatever one’s perspective, everyone involved in our industry knows how long the road to the FCC’s current proceeding on an open Internet has been.  Today, I sent a letter to the FCC, which is similar to a filing I made last month.  These letters, which build on the work and thoughts of others, outline a way forward – a middle ground that will accomplish the President’s, the Congress’, and the Commission’s goal of an open and universally available Internet.

Public policy often works best when it’s based on what has come before.  In this area, we have a good starting point:  the FCC’s existing Internet Policy Statement. The next building block on the way forward is a very thoughtful letter that Senator Olympia Snowe sent to the FCC on October 22.  She focused on maintaining today’s “openness and freedom” for users while ensuring that government doesn’t inadvertently undermine the efforts to achieve affordable, ubiquitous broadband.

This same focus also lies at the heart of the statement titled  “Finding Common Ground on an Open Internet,” jointly posted by Lowell McAdam, CEO of Verizon Wireless, and Eric Schmidt, CEO of Google, on October 21, 2009.  Those companies, in our view, avoid embracing a strict nondiscrimination standard and instead focus on forms of discrimination that are unreasonable or anticompetitive.

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