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Monday
Jul112011

It's 2018: Where’s the PSTN?

Telecom Experts Argue PSTN Could be Dead by 2018

On June 29, 2011, the Technical Advisory Council (TAC) presented a newsworthy and controversial recommendation to the FCC: “The FCC should take steps to prepare for the inevitable transition from the PSTN,” and they should do it as fast as possible by establishing a specific end date. TAC referenced a National Center for Health Statistics report that determined only 6% of the U.S. population will use the PSTN in 2018; therefore 2018 seems like a reasonable year to put the PSTN to bed forever. There is no denying that landline PSTN customers are bailing at a rapid pace, but is 2018 too soon to expect 100% broadband and wireless adoption, such that no Americans are without at least one reliable communications connection?

Tom Evslin (a member of TAC, a telecom expert and author of the blog Fractals of Change) noted in a blog post last week that “People are making a free-market decision to abandon the PSTN for cellular or VoIP service.  People are chatting and texting and emailing and tweeting instead of talking.” Free market momentum aside, Evslin argues that the government needs to be involved in the transition so that people are not stranded without any form of communication, which raises special concerns for public safety. Regarding the phase-out, Evslin argues, “The date, in my opinion, should be the earliest possible time we can assure that alternatives to the PSTN are universally available, so long as we spend less public money in providing these alternatives than it would cost us to keep the PSTN alive past the date certain.”

Several of TAC’s recommendations have specific consequences for RLECs and rural Americans, because Universal Service is currently married to the PSTN. Although the FCC is hoping to reform USF to support broadband networks, we haven’t quite gotten to that point yet. TAC recommends that the FCC “change USF funding and spending to support universal coverage and other social goals;” and “assure that mobile and/or broadband replacements are available everywhere PSTN is currently provided. The need will be greatest in rural areas.” Although I agree that the PSTN is well on the road to dying a slow death, I feel that it might be a bit hasty to start looking at ways to expedite the death of the PSTN before the ink is dry on rules for reforming USF. Furthermore, I also think it is necessary to reform USF contributions, which currently come from PSTN services, before moving towards a PSTN-less nation.  

I think the real controversy comes in when deciding how to end funding for the PSTN in rural areas. Evslin asks, “Why continue to subsidize the most expensive and least effective way of keeping people in touch?” I feel that this question really gets at the core of the USF reform debate, as many believe that it has clearly become wasteful and inefficient for consumers to foot the bill for slow adopters to continue using landline phones. However, I think this issue needs to be looked at from the perspective of telecom providers who use the PSTN to provide DSL and other services in addition to telephone services. For many providers, telephone service is becoming the least important source of revenue and is basically just an add-on for broadband. As a result, consumers can utilize the PSTN foundation for landline calls or for VoIP calls using Skype or other over-the-top applications, and they can tweet and e-mail and Facebook all they want. Many consumers also like the security and reliability that a landline provides, even if they don’t use it very often, and this is especially true for households that have poor wireless coverage. Evslin also notes, “What about leaving great grandma with no 911 and no way to call her daughters?” How will the FCC ensure that all the grandmas are willing and capable of using wireless or VoIP before the PSTN is phased out? I know how much trouble it was teaching my own grandma how to use a cellular phone, so this seems like a fairly daunting challenge that must be addressed with great care and consideration for all types of consumers.

A blog post on Telecompetitor by Bernie Arnason also commented on the difficulty of defining the PSTN. He asks, “Are the fiber connections to the wireless towers which carry wireless traffic and eventually interconnect with the PSTN, part of the PSTN? Are copper local loops that provide DSL service no longer part of the PSTN?” I believe that these are definitely some of the most important questions—where do we draw the line between the PSTN that should be phased out and the PSTN that is an integral component of broadband and wireless communications networks? I wonder if there is really a point to ending the PSTN if USF subsidies are eventually going to be entirely for broadband anyway—if there is still a consumer demand for landline service, why not just continue to offer it at the company’s full expense? I personally liked Hargray Telephone Company’s Broadband Incentive Plan for USF because it allowed for ongoing landline cost recovery as long as there were landline customers, but increased the subsidies for broadband depending on the broadband speeds that customers subscribed to. So, a company could in theory only have 10 landline customers in 2018 and therefore only get support for those 10 customers based on their 2011 support level. Meanwhile, the real cost recovery would come from the 10, 20, 100 Mbps broadband customers, where the company would get the 2011 landline recovery amount times a weighting factor based on the speed.

The discussion on ending the PSTN is definitely in the early stages, so it is hard to tell if TAC’s exact recommendations will come to fruition or not. TAC also recommends updating the National Broadband Plan to include the PSTN phase-out, but I think that the USF reform rules should be published before this step can be considered more seriously, else the FCC may end up creating even more anxiety-inducing regulatory uncertainty. Meanwhile, it wouldn’t be a bad idea for RLECs to start thinking about 2018, and start estimating their cord-cutting rates for the next few years. It also might not be a bad idea for RLECs to start teaching the local grandmas how to use cell phones and Skype.

Learn more about TAC’s PSTN recommendations here. Tom Evslin’s blog post is available here, and Bernie Arnason’s is here.

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    [...]It's 2018: Where’s the PSTN? - The ILEC Advisor - JSI Capital Advisors[...]
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    [...]It's 2018: Where’s the PSTN? - The ILEC Advisor - JSI Capital Advisors[...]

Reader Comments (2)

What about the business customers that are NOT leaving the PSTN in droves? SOme of them include schools, hospitals, and givernments. And who, exactly is supposed to provide the cellular backhaul for all these enlightened wireless users? Oh, that would be the PSTN! Another arrogant report by someone who lives on the east or west coast and considers rural america fly over territory.

July 12, 2011 | Unregistered Commenterjohnny RLEC

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October 16, 2011 | Unregistered Commenteraqbyzi aqbyzi

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