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Ah, So Why End POTS and the PSTN?
02/01/2010 06:44
 By Jim Machi, Dialogic
Last week, I discussed reading the report AT&T sent to the FCC explaining why they support an orderly end of the POTS and PSTN network. One point they made is about transitioning funds that would normally support universal telephony service to support the broadband mandate. Due to consumer movement to VoIP and wireless anyway, POTS and the PSTN costs per user are increasing every day. If you look at these networks as a fixed cost, and if there are fewer users, then the cost per user by definition has to go up. And AT&T is arguing that because of the current set of government regulations in place, the industry is effectively prolonging these networks and causing an investment shift away from broadband. Indeed, according to the report, less than 20 percent of Americans rely exclusively on POTS for voice service because of the cellular and VoIP alternatives they are also using. So because of the broadband mandate, why not use this mandate to get the universal voice services? It will be a better investment to effectively “marry” the broadband mandate and universal voice service mandate, since if there is broadband access due to VoIP, you then would have voice services. Investment needs to be made to enable universal broadband (the report talks about 8 percent to 10 percent of U.S. households still not having access to broadband) and keeping the old networks up and running causes unnecessary resource spending on them. Additionally, if broadband was made available to everyone, then “telephone calls” would also be made available to everyone, since then they could occur via VoIP. A second key point they made is one that ultimately is better for them. They are advocating eliminating government requirements to keep the POTS and PSTN networks. In other words, let the markets decide. Presumably, this is ultimately better for AT&T from a financial perspective because of the tangled web of regulations with respect to interstate and intercarrier compensation connection regulations. If these requirements evaporated, then presto — there are no compensation issues. Will this issue be easily resolved? It’s doubtful, but at least the process has started. Jim Machi is senior vice president of marketing for Dialogic, responsible for product planning, product management and marketing. Dialogic develops open systems-based telephony voice, video and signaling products for both the enterprise and service provider market segments.
User Comments !
Make no mistake, these comments by AT&T have nothing to do with what is good for the country. AT&T's argument that the government regulations are keeping investment from broadband is silly. In a nutshell, AT&T isn't happy with the game as it is being played and they can't make a case for increasing rates for broadband until they tie governmental fees and taxes to these rates. Once that is accomplished, then the government has every incentive to allow them to begin the cycle of ever-increasing rates and to allow AT&T to begin to destroy smaller competitors. In addition, the addition of substantial new regulations and compliance obligations will raise the entry bar, making it difficult for additional competitors to enter the broadband market; this plays to AT&T's advantage in that they know how to play the regulatory game very well. If AT&T's arguments are taken up by the FCC, the changes in regulations will most likely have the effect of slowing down the development of, or wiping out completely, VoIP. The true intent of AT&T's game is to get to a point where all of the websites and users on the internet are subject to some sort of payment scheme analogous to long distance (where access charges are paid by the long distance companies to the local exchange carriers). In the way AT&T wants the world to work, the websites and VoIP companies will pay some sort of fee to the broadband carriers in order for the website information to reach the end-user. Hopefully, the regulators will see through the sham arguments.
Posted by: Anon | February 01 2010 09:36:13
There's no doubt that maintaining the legacy copper infrastructure is expensive, however copper is still the primary media for end users to get their broadband services. So, the copper infrastructure cost remains, regardless whether it is used for POTS or xDSL.
What would change this equation is heavy investment in both fiber and wireless to rapidly supplant the legacy copper base, which may be AT&T's approach. What it really bodes is the death-knell for all voice and data CLECs who continue to rely on the copper infrastructure. The reason being that the FCC blocks competitive access to any fiber for the CLECs: if you remove the copper, you remove all competition. End game.
Posted by: Anon | February 04 2010 09:54:23
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