Innovation Files has moved! For ITIF's quick takes, quips, and commentary on the latest in tech policy, go to itif.org

The State of (Rural) Wireline Communication

The Senate Commerce Committee’s Thursday hearing is titled “State of Wireline Communications” but it’s going to have a heavy rural bias. This is par for the course in the Senate, where rural Americans have more power than the urban majority. When your district is defined by geography rather than population, that’s going to happen. The witness list includes the subsidized rural carriers, CLECs, Public Knowledge CEO Gigi Sohn, and Larry Downes.

The actual focus of the hearing is going to be the phase out of Plain Old Telephone Service (POTS.) Senators are worried about this, as rural folks aren’t at all comfortable with the broadband Internet and the rumors they’ve heard about POTS going away. To be fair, if you want the fastest and cheapest broadband service, you don’t move to cattle country, you find yourself a high-rise in a major Internet city such as San Francisco where you can get fiber service for a rock bottom price.

Rural telecom carriers live on subsidies from the Universal Service Fund’s “High Cost Fund” and termination (interconnection) fees from urban carriers. As POTS is allowed to go extinct in the cities, rural telecom costs will skyrocket and the USF will get totally out of control. Rural telecom has never been self-supporting, because networks benefit from economies of scale that aren’t found in low-population density areas. The AT&T monopoly of the Kingsbury Commitment promised rural service on the same terms as urban service, and mainly delivered. This was made possible by hidden money transfers from urban to rural areas and from business users to residential ones.

There was also a technical price for this kind of universal service, insofar as the variety of communications services and providers we have today wasn’t possible. If everyone had the same service at the same price, it wasn’t kosher for some people to pay more to get more unless the enhanced service – such as broadband – was available everywhere all at once. That turns out to be a big barrier to overcome, with enormous implications for the subsidy system.

Covering rural America with high-quality, low-priced, high-reliability broadband service isn’t actually more difficult or more expensive than preserving POTS would be, provided policy makers separate the abstract goals of universal broadband from the implementation accidents that have guided POTS regulation for nearly a century. One attempt to isolate the goals comes from Public Knowledge, oddly enough. They’ve articulated a list of five goals (they call them “principles”) that they wish to preserve/achieve across the transition from POTS to IP as the common standard for communication. The goals are:

  1. Service to all Americans. …We must make sure that all Americans, regardless of race, sex, income level or geographic location, participate in and benefit from any upgrades to our telecommunications networks.
  2. Interconnection and competition. …The FCC must make sure that the IP universe supports competition and requires interconnection among providers.
  3. Consumer Protection. …Consumers must not lose their existing protections because of the change in phone technology.
  4. Network Reliability. …We must make the all-IP network as reliable as the traditional phone network.
  5. Public Safety. …we must make sure that the next generation of technologies does not mess up 9-1-1 or other emergency communications.

AT&T has said this is a great list of goals to begin with, although they don’t endorse the way PK works out the details. Indeed, PK tends to work out the details in such a way that the Internet would have to behave a lot more like POTS before PK would be happy.

From PK’s point of view, for example, Universal Service means that rural America is on a level playing field with urban America with respect to wired broadband:

One of the most important goals of communications policy in the United States is reaching universal service for all Americans across the country. The transition of the PSTN is an opportunity to expand and improve the communications service that all Americans receive, and our communications authorities must determine how they can continue to serve that goal as the traditional make-up of the PSTN changes.

In other words, despite the fact that the U. S. never achieved 100 percent universal service for POTS, not only must IP reach everyone, it must do so at a level of quality that constantly improves with no increase in price over IP service in rural areas over other areas. So lawmakers will necessarily be required to constantly adjust the specifics of “basic service” or delegate that job to the FCC. This goal would not be hard to achieve if PK were willing to consider broadband service provided over terrestrial wireless or satellite as a legitimate form of broadband, but they’re adamant that “basic¬† communications service” only occurs over wires.

A more sensible way to approach universal service would be to establish a meaningful service standard, index it to production costs such as population density and distance from Internet Exchange Points, and then open the door to any technology that can achieve it. The dimensions of the service standard would be price, bandwidth, latency, data volume, and reliability. These are all critical, and to the extent that technologies differ in meaningful ways, these metrics capture the differences. Cost isn’t on the list because the subsidies are meant to hide it from users, but it should be permissible to require people in remote areas to pay more than city dwellers do; they pay lower rent, after all.

PK’s demand to make interconnection mandatory between each pair of networks is troublesome and amazingly contemptuous of one of the Internet’s basic operating principles. POTS interconnection is mandatory because it works in a fundamentally different way from Internet interconnection. If two Internet services don’t want to interconnect, they can still exchange traffic by mutually interconnecting to a third network. In fact, this is the most common way for smaller Internet service networks to interconnect; there are too many for everyone to have an agreement with everyone else. At the height of POTS, there were 100s of PSTN networks worldwide, but there are already hundreds of thousands of IP networks (and billions if you count all the homes and businesses.) So this goal is completely unnecessary.

PK defines its consumer protection goal in non-controversial language that forbids the usual sorts of deceptive practices, but fails to list runaway subsidies as a bad practice.

PK goes badly off the rails in its discussion of network reliability. They’re very Pollyanna about the reliability of POTS and apparently ignorant of the Internet’s approach to reliability. PK has the mistaken belief that POTS is bullet proof, despite the evidence from Hurricane Sandy. It’s all well and good to tout the benefits to the consumer of powering home telephones over the telephone line as POTS does, but a sensible person realizes that storms that wipe out telephone lines make this advantage moot.

We’re familiar with this in California because earthquakes also don’t care whether any given wire carries power, telephone service, cable TV, or data. Severe natural disasters are simply hell on wires of all kinds. Wireless, on the other hand, is powered by batteries that can be recharged in any car when there’s no commercial power and are capable of operating when telephone lines are down provided one of many towers is reachable and powered, as most are.

The larger problem is that POTS was the one and only network, so it had to be more reliable than the multiple IP networks of today are. The Internet achieves reliability through a multitude of relatively cheap parts, not the small number of golden parts that POTS is built out of. So PK wants us to abandon the Internet’s “reliability by redundancy” approach in favor of rules that what drastically increase the cost of IP service and still fall far short of what’s possible in reliability by dropping wireless from the picture. This is especially odd because PK is so obsessed with the shortcomings of Voice Link, the product Verizon installed on Fire Island because POTS was literally blown away by Sandy, self-powered lines and all. When Sohn praises POTS reliability and roasts Voice Link at the hearing, she’ll be talking out of both sides of her mouth.

PK construes its public safety goal way too narrowly: Instead of starting with First Net and working out to the citizen, they start with today’s 911 service and try to force it on IP.¬† Public safety communication begins with a portal in the public safety network that’s inherently compatible with and reachable by the average citizen. We shouldn’t think of 911 as we do today, simply a means of reporting crimes, fires, and medical problems. We should think of it as a way for citizens to increase public safety’s awareness of circumstances by such means as sending live video streams of events of interest and acting as eyes and ears when that sort of thing is appropriate. It also means connecting by text messaging and other means when the volume of reports is high and networks are damaged. This whole concept needs to be rethought, and there’s little reason to believe the FCC’s NG-911 committee has the nerve to do it justice.

Conclusion

The Senate will be asked to force-fit IP networks into a regulatory straight-jacket designed for the voice-only, monopoly telephone network. The impetus to do this comes from subsidy-driven carriers and career POTS regulators, who will argue that rural voters demand little to no change to the fabulous service they have today.

Senators should resist this push for two reasons: POTS is not nearly as wonderful as those whose livelihoods depend in it will claim; it it were, there would not have been any need to invent and develop broadband, mobile networks, and the Internet. Rural voters are smart enough to realize that POTS is no substitute for the new technologies.

Senators should also refuse to stuff the Internet into the POTS bottle because it’s wrong-headed and harmful to innovation. The Internet economy creates opportunities that POTS never did because it doesn’t have the same technical, economic, and regulatory limitations. Internet Protocol is appropriate for the scenario in which multiple applications – not just voice – are served by multiple networks, not just TDM copper pairs. If anything is to be preserved, the norms that exist around the Internet should take precedence over those that were created for POTS.

It’s a different world now, after all.

Print Friendly, PDF & Email