The Washington Post’s lead story today, “Landline Rules Frustrate Telecoms,” puts a needed spotlight on obsolete communications law that: falsely assumes the telecom marketplace is still a monopoly with no consumer choice; and still mandates telecom companies subsidize below-cost, copper-line telephone service to households as if it were still a government-sanctioned monopoly.
A bit of history is warranted here. This century-old political arrangement — the 1913 Kingsbury Commitment between the Federal Government and AT&T — effectively established a government-sanctioned monopoly in return for universal telephone service to all Americans and utility rate of return regulation. In 1996, Congress reformed Federal communications policy by ending monopoly and promoting competition. Today, despite copper telephone networks losing half of their customer base to cable, wireless, VoIP, broadband and other Internet competitors (and losing most of their most profitable landline customers) many legacy telecom legal requirements, like subsidized below-cost telephone service, live on despite being obsolete. This means that in today’s fiercely competitive voice service marketplace, mandating that only one provider must provide subsidized below-cost, copper-line service to potentially millions of households, is a classic un-funded mandate and a hidden, unfair, investment-distorting business tax on only one competitor.
The Post article’s discussion of criticisms of ending the obligation to provide below-cost telephone service to households warrant rebuttal one by one.
It would leave Americans with less reliable options: Wireless and Internet service has revolutionized the notion of what communications “reliability” is, because cell-phones can be a much more reliable service because they are actually with the user wherever they are at any given time, which often can be inconveniently far away from a fixed-line telephone. A wire line phone is only reliable to the extent one can physically reach it exactly when one needs it. And wireless devices offer more means to reliably communicate than just voice: i.e. texting, messaging, emailing or video conferencing to mention a few.
It would leave Americans with more expensive options: To be fair, the cost-per-minute of wireless communications has fallen 85% in the last decade and there are many very low-price, low-use wireless plans available in the marketplace. Moreover, if someone has broadband access, free or commercial, there are a wide variety of free voice services from Microsoft, Apple, Facebook, Google, and other software providers. In most all instances, there are low cost or free competitive substitutes to copper-line voice service; that’s why several million American households drop their copper-line voice service each year.
Telephone would no longer be a basic guarantee of the government like water and electricity utilities. That’s right, because technology and innovation has long made the notion of a telephone utility obsolete. Most all American households have a choice of cable phone service and 5+ wireless providers to choose from, in addition to many free voice services if one has broadband service either for free or paid for. Voice communications is not a utility just as transportation is not a utility; that’s why we don’t mandate a government entity to guarantee a subsidized, below-cost horse and buggy service for every household.
Internet and broadband should be a utility like phone service. Does anyone think the government can build, manage, and operate advance communications networks better that America’s private sector competition can? Ten years after the 9-11 commission advised construction of a public safety network, we have witnessed ten years of indecisive hand-wringing, bureaucratic in-fighting and bungling, and ten years later the public safety network has yet to break ground.
It would leave rural, elderly and others behind. As previously discussed, there are many satisfactory alternatives to copper-line voice service for most all Americans. However, concerning the few percentage points of Americans that may not have adequate alternatives, it would be wiser, better, and much more economical for the nation to address that need with innovative targeted solutions, not an obsolete national mandate that every household in America be potentially served in way that potentially only a few percent will ultimately use that way. It’s massively wasteful regulatory overkill. It is also important to note that the Post Office is cutting back service to many remote rural locations because it is cost-prohibitive to do so.
There’s worry if broadband networks can handle an emergency terrorist attack. Immediately after the 9-11 attacks on the World Trade center, alternative data networks provided more reliable texting or emailing service than the voice network, because the voice central office was destroyed. The original designers of the Internet made it able to survive a nuclear attack, meaning that whatever portion of an Internet network of networks is destroyed, the remaining surviving nodes can still operate seamlessly with each other. Moreover, competition now provides many redundant networks, if one or more networks are compromised in a massive terrorist attack or natural disaster, others could still operate.
Simply, objective observers can see that these obscure obsolete laws obstruct competition and obliviously obfuscate the observation of reality.