Today, USTelecom filed a petition requesting that the FCC declare that traditional phone companies no longer possess market power when providing switched access services, or more plainly, “plain old telephone service” (POTS), and therefore are no longer subject to dominant carrier regulation under the Commission’s rules. Given the many ways all of us communicate with each other these days this seems pretty obvious, but let’s review some of things that have brought us to this point.
The changes occurring in the communications landscape over the past several decades have forever changed the way we reach out and touch someone. For those of us with children, the changes are apparent every time we examine our “telephone” bill, and a quick review of mine over the last six months starkly illustrates the point. Each month on my mobile phone account, my unused AT&T “roll over” voice minutes grow as voice calling becomes a smaller and smaller portion of the communications options my family uses. Thousands of incoming and outgoing mobile text messaging details, most of which are associated with my children’s phones, fill the majority of the call details outlined on my bill. The ratio of text messages to voice minutes for my children is three to one. Interestingly, almost exactly the reverse is true for my wife and me. And what is missing from my home phone and mobile phone bills is as profound as what is included. Missing are the hundreds of voice minutes that have been replaced by email threads, tweets and status updates on social networking websites.
And despite the obvious shift observable in our children, you would be wrong to think the communications shift is limited to those born after AT&T was split into “Baby Bells” in 1984. The very first “baby boomers,” born in 1946, are also switching from landlines to new technologies. Fifty-three percent of Americans aged 65 and over use the Internet and email, and 31% of Americans aged 55 to 64 use smartphones.
According to the Center for Disease Control, for the first half of 2012, nearly 36% of U.S. households discontinued landline telephone service altogether, preferring instead to use a mobile phone for all of their calling needs. And USTelecom estimates that that number will grow to 40% by year end. In addition, as outlined in the USTelecom petition, “…within the next year the number of households being served by an interconnected Voice over Internet Protocol service will surpass the number of households subscribed to an incumbent LEC switched access service.”
These are dramatic changes; changes that require all of us step back and examine the usefulness of a regulatory environment designed for a 1970s marketplace where the service provider, device maker and research arm were generally one and the same. In the 2012 marketplace, we have multiple platforms and providers for voice services, including mobile, interconnected and over the top VoIP, personal computer-based options such as Skype and Facebook, and multiple equipment manufacturers, and research and development entities.
These changes represent a turning point. As Chairman Genachowski recently remarked, “…the ongoing changes in our nation’s communications networks require a hard look at many rules that were written for a different technological and market landscape.” When one considers that the dominant carrier rules that attach to incumbent LEC switched access services are being applied in a marketplace where those providers have lost over 50% of their access lines since the beginning of 2000, one can easily conclude that a “hard look” is required. Add to that the fact that these access line losses continue to decline at more than 10% each year and one can see why the notion that the incumbent LECs remain dominant is outdated, distorted and speaks to the need for regulatory reform.
It’s time for our nation’s voice services regulatory regime to catch up with the dramatic changes that have shaped the communications landscape in recent times. Granting USTelecom’s request for a declaratory ruling reflecting these changes would be a step in that direction.