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Wednesday
Aug032011

Are You in "Club 2018?"

Telecom 2018 Workshop Participants Debate the End of the PSTN

About a month ago, the Technical Advisory Council (TAC) made a bold recommendation to the FCC: set a specific end date for the PSTN. This recommendation was largely based on a National Center for Health Statistics study that estimated only 6% of Americans would use landlines by 2018. This recommendation set off a flurry of debate, and it also brought the Telecom 2018 Workshop to Washington DC on July 28, 2011. This workshop was the first of probably many events dedicated to discussing issues related to phasing out the PSTN, and I was happy to have had the opportunity to attend. As one of the hosts said at the end of the conference, I will one day be able to tell my children that “I was there” when the industry started planning the end of the 130+ year telephone network.

The workshop really tested the waters to see what different stakeholder groups thought about setting a specific end date for the PSTN—the perspectives ranged across the board from reluctant to highly optimistic. The panelists and presenters came from all corners of the industry too—some of the companies represented were AT&T, Public Knowledge, John Staurulakis, Inc., Google, Acme Packet, Verizon, CEA, Telecordia and TIA. There were individuals from a variety of legal and consulting firms, and there was even surprise appearance by National Broadband Plan Director Blair Levin. The event was organized by Daniel Berninger, president of GoCiper Software, and co-moderated by John Abel from Team Lightbulb.

Two industry leaders gave opening remarks at the day-long event: Richard Wiley, partner at Wily Rein, former FCC Commissioner and leader in the lengthy transition to digital TV; and Tom Evslin, a member of TAC and a leading voice in the 2018 end-date recommendation. Wiley talked about the decades of efforts and evolution to finally accomplish the DTV transition, which he considered a success. According to Wiley, the elements of success in the DTV transition included reliance on the engineering community, open and transparent peer review, rigorous testing, opportunities for all participants to come together, the efforts of the Grand Alliance, and that the evolution was not dictated by the government. I considered all of these elements to be especially insightful for the road ahead in the telecom industry, especially reliance on the engineering community and not expecting or allowing the government to dictate the entire transition.

Wiley also explained that it is important to develop clear objectives, and it is especially important for consumers to understand what is going on by providing information with limited potential for misunderstanding. Wiley made an interesting comment that the eventual transition to an all-IP communications network may result in greater competition and choice, which will create “less need for pervasive government oversight,” and possibly eliminate the “demarcation lines” that currently segment the telecom industry.

Evslin discussed the lifecycle of the PSTN, noting that it peaked during the dial-up Internet era when people were rapidly adding second lines, but then it started to decline when DSL became popular. He strongly believes that the PSTN is nearing the end of its useful life, and he also stated that the more valuable POTS consumers have largely abandoned the service already. Evslin touched on the intertwined issues of reforming USF and ending the PSTN, and he argued that the PSTN is basically being kept alive by government programs. He said that USF was a good program but it has now failed, and the PSTN subsidies are hogging resources that should be going for broadband deployment. Evslin believes that January 1, 2018 should be the official end-date for the PSTN—he thinks that 6 years is a sufficient transition period and each extra year will just diverts resources that should go to IP networks. Evslin envisions an all-IP future where “all phones can be smart,” and the every-day office desk phone could have some really interesting capabilities, like the wireless smartphones we all use now.

The first panel of the workshop, moderated by Harold Feld of Public Knowledge was called “Deconstructing the PSTN: What Does it Mean to Turn it Off?” Valerie Wimer from John Staurulakis, Inc. presented the RLEC perspective in this panel, and she emphasized that RLECs utilize the same facilities for broadband as they do for traditional telephony. She also argued that rural carriers have unique challenges in terms of distance and population density, and Title II regulations are—and will continue to be—important for these companies. Representing the CLEC perspective, Thomas Jones from Willkie, Farr & Gallagher argued that we should think of Telecom 2018 as a transition, not as a retirement of the PSTN. He added that forcing the transition to a new technology will not necessarily solve some of the market failures that exist now, and an abrupt end to the PSTN could have negative consequences for price, choice and competition. Colleen Boothby from Levin, Blaszak, Block & Boothby agreed that technical evolution alone does not always change the market structure, and regulations will still be needed even in an all-IP ecosystem. Overall, this panel was fairly skeptical about the benefits of setting an end-date for the PSTN. Feld asked what would happen if we shut off the PSTN tomorrow; Wimer replied that networks would stop and RLECs would default on RUS loans.

The second panel, “Embracing Innovation Across the Ecosystem,” really brought up a lot of questions that must be addressed in the process of transitioning from PSTN to all-IP: interconnection obligations, non-discrimination principles, network neutrality principles (soon-to-be laws, presumably), device markets, privacy, the role of state utility commissions, open standards, and USF/ICC reform are all areas that must be analyzed closely. I was pleased that this panel discussed the importance of reforming USF and ICC in advance of setting an end-date for the PSTN. Panelists Barlow Keener (Keener Law Group) and Rick Whitt (Google) both agreed that there is a clear need to reform USF from “a world that is less and less relevant” to a world where USF subsidizes IP network build-out and network upgrades.

The rest of the day consisted of individual presentations from industry experts on transition solutions and deployment models.  Here are a few of the points that stood out to me:

  • Mark Uncapher from TIA provided data analysis to illustrate that the decline in business voice lines has been much less dramatic than the decline in residential voice lines, which leads to the question:  How will the transition accommodate PSTN-reliant business customers?
  • Don Troshynski from Acme Packet argued that there is “no one solution to fit all” in delivering IP networks, but successful networks will provide a superior user experience, service flexibility, and be secure, trusted and scalable.
  • Link Howeing from Verizon explained that monopolies are not realistic in an all-IP ecosystem because there are multiple facilities-based competitors and different business models, unlike in a monopoly marketplace. He believes that there are real benefits to setting a firm date for ending the PSTN, but the industry should not get too caught up on a deadline and the corresponding regulatory aspects.
  • Jesse Oxman from CEA talked about the success of the DTV transition and the consumer coupon program for converter boxes. He added that the last deadline push-back during the DTV transition was unnecessary and ended up causing panic and confusion. He thinks most of the lessons from DTV will carry over to the transition to all-IP.
  • Bob Frankston from Frankston Innovating made some interesting observations about how bits are not consumable—they are like the alphabet and you cannot say “you used up the letter B, so you can’t use it anymore.” He used an analogy to compare the PSTN to IP networks, where PSTN users are like tenants with monthly fees and rules to follow, but IP users are like owners because bits can be used in any way, by any device, with no marginal costs.
  • William Manning from Booz Allen Hamilton commented on the challenges for rural areas, saying “if you aren’t in an urban or suburban area, you’re toast,” referring to the apparent capacity challenges for rural ISPs.

At the end of the conference, Berninger went around the room and asked everyone if they were in “Club 2018” or not, and what they thought the next moves should be. I responded that I was indeed in “Club 2018,” but only if USF and ICC are reformed in such a way that rural telecom providers are able to continue investing in IP networks.

I believe that the next step in the Telecom 2018 process will be to get the engineering community involved, and continue bringing together diverse stakeholders to hash out the different perspectives. Generally, most of the attendees were in “Club 2018,” and several others also commented that it will be important to get regulatory issues like USF, ICC and net neutrality figured out before we can move forward. One 2018 skeptic argued that broadband adoption must be increased significantly before we can take away a viable means of communication. Overall, this workshop left me with a lot of things to think about regarding the future of communications, the role of rural telecom providers in an all-IP ecosystem, and how an end date for the PSTN may impact USF and ICC reform (and vise versa).

So, are you in Club 2018?

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