AT&T Looks to Leave Landlines Behind

Old Rotary Phone (thumb)

In a December 21 filing with the Federal Communications Commission (PDF), telecommunications giant AT&T has asked the government to set a firm deadline for the decommissioning of the nation’s existing copper-based landline telephone network, calling the system a “relic of a by-gone era.” AT&T wants to move to broadband, VoIP-based services and unburden itself from decades of regulation surrounding landline telephone service, along with its costs and access requirement.

AT&T’s filing isn’t entirely self-serving: the company’s filing is actually a response to an FCC Notice of Inquiry the agency put out to the industry in early December asking how major players thought the industry should move to an IP-based telephone system. But the filing does mark the first time a major telco has gone public with its views on how to retire Plain Old Telephone Service (POTS) and the Public Switched Telephone Network (PSTN) in favor of broadband-based services.

“Congress’s goal of universal access to broadband will not be met in a timely or efficient manner if providers are forced to continue to invest in and to maintain two networks,” the company wrote in the filing. “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 company wrote in the filing.

AT&T notes that almost a quarter of U.S. households have dropped their landline service entirely, and some 700,000 landlines are being cancelled every month. At least 18 million U.S. households subscribe to VoIP services like Vonage or Skype, and cable companies anticipate they will be providing digital phone service to almost 25 million customers by the end of 2010.

However, it is important to remember that while many American households may be abandoning POTS phone service, many never got reliable phone service in the first place, and broadband Internet remains one of those science-fictiony things one hears about from other people. Any transition to an all IP-based phone system will have to have provisions and requirements for rural and remote areas that only have phone service (in some cases, just barely) because government regulation mandated it. IP telephony raises significant challenges in this area, since it could potentially gut the FCC’s Universal Service Fund (which subsidizes phone access for low-income users and rural phone operators) and inter-carrier compensation schedules that enable rural providers to charge back to major carriers for remote service. Although inter-carrier fees are subject to their own abuses (like conference and pay-per-call services located in real areas) the regulations do serve legitimate needs.

AT&T has proposed a “numbers-based” system for replacing Universal Service Fund fees, although some have criticized such a system for effectively being a “flat tax” that could dramatically raise communications costs for some types of customers, particularly schools and universities.