The cities of Carbon Hill, AL, and West Delray Beach, FL, have been selected by AT&T to trial the elimination of copper landlines.
Visitors to Carbon Hill, AL are welcomed with signs reading "The city with a future." AT&T would like to add "without landlines" to these signs. Carbon Hill is a former mining town, located about 55 miles northwest of Birmingham, and it has been selected as one of AT&T's first trials to eliminate landlines.
On February 28, AT&T announced a trial to eliminate landlines at Carbon Hill and at West Delray Beach, FL. If approved by the Federal Communications Commission (FCC), AT&T would immediately stop offering landlines - POTS, Plain Old Telephone Service (copper) lines. All landlines would be disconnected by 2020. This is in response to the FCC notification to allow carriers to launch "experiments" to wean the public off of old, circuit-based phone services. Some of the FCC standards that must be met during this conversion include:
• Public safety communications must be available no matter the technology
• All Americans must have access to affordable communications services
• Competition in the marketplace provides choice for consumers and businesses
• Consumer protection is paramount
AT&T's alternative solution is to offer broadband and VoIP (Voice Over Internet Protocol) services. While VoIP service has become very popular, there are some areas of concern. Specifically, for business customers, many depend on analog lines for fax, alarm and elevator lines. In particular, the elimination of POTS lines for alarm (fire and burglar) may be problematic. Given the potential for severe and quantifiable economic damages with the failure of alarm lines, it will be interesting to see how this trial works. Some vendors are pushing wireless alarm lines as a solution.
At first blush, why would carriers want to discontinue their old reliable circuit-based, analog networks? Since the old network is largely a "fixed cost", with little to no future investments, shouldn't this be very profitable for carriers? Why would AT&T and Verizon look to get rid of a profitable part of their business? There are a couple of reasons.
First, the profitability of landlines is decreasing. As revenue decreases (40% of the U.S. population does not have residential landlines), the cost of maintaining an old (and obsolete) network is going up. To put this in perspective, imagine maintaining a group of VCRs. While the technology is proven, the cost of maintaining VCRs goes up every year. It becomes more difficult to find parts. As trained technicians retire, maintenance becomes more difficult and costly. Who wants to work on old technology? The more types of technology you support, the more difficult it is to maintain, repair, and provide customer support, etc.
Second, as public companies with stockholders, carriers are constantly looking to increase stock prices. The market favors organizations with high revenue growth (e.g. Amazon) and punishes those with no growth or declining revenues. The old POTS network is a significant drag on the stock for both AT&T and Verizon. This is a major reason that Verizon spun off its Northern New England landlines to Fair Point a few years ago.
While it is too early to tell how this trial will go, a couple of potential dilemmas already face AT&T.
In Carbon Hill (population 2,000), about 4% of residential customers are too far away from AT&T's facilities to receive broadband. Simply cutting off landlines with no viable replacement runs against the FCC edict that carriers provide universal service. Currently, there are no solutions offered to address this issue.
In Delray Beach, (population 60,000), about 50% of residential customers are 65 years or older, the age group that is the slowest to embrace new technology. It is also the age group with the highest level of voter participation. If the senior residents of Delray Beach are unhappy about this change, it is a safe assumption that they will let their representatives know. Once Congress gets involved, it will likely slow down the entire process.
One way AT&T is handling the landline issue is to "incentivize" customers to move off their old network - specifically by raising POTS line rates. Take the example of California. In 2006, the California State PUC allowed carriers to increases prices "at will." Since then, AT&T has increased residential flat rate line cost by more than 115%. And one can only assume these price increases will continue in future years.
So what will be the outcome of AT&T's trials in Carbon Hill and West Delray Beach? Stay tuned, it should be interesting.
The Society of Communications Technology Consultants (SCTC) is an international organization of independent information and communication technology (ICT) professionals serving clients in all business sectors and government worldwide
