Feature Article

December 18, 2012

Will AT&T, Verizon Abandon Some Rural Networks?

In the past, the notion that either AT&T or Verizon might be allowed by the Federal Communications Commission to stop serving customers in rural areas would be ludicrous.

Historically, incumbent telcos have been the “carrier of last resort,” with obligations  to provide service to all potential customers, even if other competitors also operate in the same areas.

But state regulators in Florida, North Carolina, Texas, and Wisconsin already have ended carrier of last resort obligations. And it is possible that with part of a transition to IP networks, and a decommissioning of the older time division multiplex networks, there could be important changes in universal service and carrier of last resort policies.

It is likely that AT&T and Verizon would only be allowed to do so if Long Term Evolution mobile service is available, and both firms could sell a fixed version of that service to customers in areas where landline service is terminated. But the notion no longer is unthinkable. 

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“Over the next five years, AT&T and Verizon will abandon some areas,” says Kent Larsen, CHR Solutions SVP. The reason is simply that executives no longer see a path to providing service that can earn a profit in some of their rural serving areas.

For clues as to what might happen, we all have to follow what the FCC is doing and saying about a transition to an all-IP network, with a shutdown of the legacy time division multiplex network. And there is a good reason the FCC is looking at such a change.

The IP transition for the whole U.S. communications business is getting new attention as the Federal Communications Commission launches a new effort to plan for an end to the time division multiplex “public switched telephone network.”

"The Technology Transitions Policy Task Force will play a critical role in answering the fundamental policy question for communications in the 21st century: In a broadband world, how can we best ensure that our nation's communications policies continue to drive a virtuous cycle of innovation and investment, promote competition, and protect consumers?" said FCC chairman Julius Genachowski.

Dwindling use of the PSTN is driving the new attention.

The Federal Communications Commission Technology Advisory Council thinks U.S. time division multiplex fixed consumer access lines could dip to perhaps 20 million units by about 2018. At one time there were about 175 million access lines in service.

Others, such as Larsen, think lines overall could dip to about 50 million over the next five years, then to about 40 million on a long term and somewhat stable basis.

The TAC forecast might be tempered by its omission of business lines or perhaps voice lines provided over broadband connections. But the general direction, if not magnitude, are hard to argue with.

Access lines in use are declining. The only issue is how fast the decline will happen.

So there will be lots of pressure not to simply recreate older TDM rules for the competitive IP network and business. More flexible rules about “carriers of last resort” could be among the changes.

Edited by Brooke Neuman

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