JSI Capital Advisors - The ILEC Advisor

“Sunset the Phrase ‘Sunset the PSTN’”

The first thing you should probably know about the FCC’s second “The PSTN in Transition” workshop, held on December 14, is that it was long—I’m talking 8 hours of economic, technical, legal and regulatory perspectives, debates, statistics and countless questions along the way. More importantly, it was extremely engaging and interesting. I was glued to my computer the entire day, opting not to sit in the FCC Open Meeting room in a suit with a short-lived laptop battery for 8 hours. Keeping this in mind, it was quite challenging to narrow down the key take-aways from the day, but there were certainly several important underlying themes as well as particular questions that rural providers might want to think about, including:

Regulatory lag is a notorious problem, so would an FCC mandate for a PSTN sunset cause more harm than good considering how far along we are in the transition already?
Are we assuming that IP is the end-all-be-all for communications networks, and we won’t possibly evolve beyond IP in the next decade or so?
What minimum speed, capacity, and quality of broadband will be good enough for a ubiquitous, non-discriminatory, affordable IP network? What basic services and applications should it support—Facebook? Over-the-top video?
What are the consequences for locking-in a particular technology, or “picking winners and losers?”
How will we manage the conversion to IP and the coexistence of technologies during the transition?
Should the end-date for the PSTN be targeted toward the early adopters or the hold-outs?
Does there need to be a “termination fund” to support the transition? If so, how on earth will that be funded? How would you convince Congress—and taxpayers—to support a fund that essentially kills the network that the very same taxpayers (as well as the industry) have spent billions of dollars building? Personally, I think this could be the greatest challenge.

Now that you have some food for thought, let’s look at some stand-out points by specific speakers.

In the first panel, “Impact of the Transition on the Technology and Economics of the PSTN,” Richard Shockey (SIP Forum) and Joe Gillan (Gillan Associations) both expressed frustration with the term “sunset the PSTN.” Shockey noted that the term is confusing, and should instead be a “renewal of our communications systems.” He also added, “We are not taking away grandma’s phone.” Gillan recommended that we “sunset the phrase ‘sunset the PSTN,’” and rather think of it like a “rebirth.” Dale Hatfield (University of Colorado) and William Lehr (MIT) continued the theme of the first workshop by stating that the definition of the PSTN in this context is really unclear. Hatfield asked if the PSTN was a service, a network, a regulatory construct, or a social contract; and he recommended creating multi-stakeholder groups to rely on the industry as much as possible to come up with solutions. He also warned against picking technology winners or losers.

The third panel, “Implementing the Transition to New Networks,” brought thought-provoking comments from participants from Verizon, Comcast, Carnegie Mellon and XO Communications. David Young (Verizon) pointed out that even if companies, technologies and markets are in transition, regulations and laws do not usually transition very rapidly or easily. Marvin Subu (Carnegie Mellon) argued that transitions take time, for example the IPv4 to IPv6 transition will likely take decades. Therefore, it is important to manage technical aspects like conversion and coexistence, but also let market forces determine the pace of the transition. Young later added that some remnants of the PSTN will likely hang around for a long time, but there is no real reason to pick an artificial date to kill them—they will probably just go away on their own once they become too costly to maintain.

There was a very creative and apropos analogy in the fourth panel, “Expectations, Emerging Technologies and the Public Good.” Kevin Werbach (University of Pennsylvania – Wharton) applied transitioning the PSTN (“the death of an old friend") to the Kübler-Ross Five Stages of Grief, broken down as follows:

Denial: We can’t plan for things we don’t anticipate. Werbach recommended that the FCC initiate a proceeding to identify conflicts, opportunities, ambiguities, and what should be preserved.
Anger: Werbach predicted that there would be indeed losers in the process, and some “will throw themselves across the tracks.” Objections should be addressed sooner, rather than later.
Bargaining: Werbach warned that “those who can game the regulatory process will do just that.” It is important to know upfront what should be mandatory and what is up for negotiation.
Depression: Knowing something is going to happen doesn’t necessarily mean it will happen. We should have “energy and enthusiasm” and a “bias for action.”
Acceptance: Werbach recommended developing a common visulaization for ending the PSTN, which will help the goals become more tangible.

The final panel, on economic issues, brought a forceful perspective from Lee McNight (Syracuse University)—he recommended a rapid “graceful exit,” from PSTN regulations as soon as 2015. He argued that creative destruction is driving the transition, and there is no point in delaying the obvious. Regarding the PSTN, McNight provided a short eulogy: “It’s been a nice run. It’s over…Thanks for the memories. It’s been nice. Let’s have a big party.”

Should we celebrate the swift demise of the PSTN or allow it to gradually shrivel to insignificance, and then yank out the cord to the respirator? Will the PSTN end with a whimper or a bang? I’m not sure these workshops helped answer the fundamental questions of when, why and how this needs to happen, but they certainly provided plenty of fodder for the coming months while the industry and regulators try to figure out the path forward.

If you have 8 hours to spare, it is well worth the time to watch the full workshop, available here.