PSTN phase-out workshop endeavors to separate the baby from the bath water

As FCC Wireline Bureau Chief Sharon Gillett described it, an FCC workshop yesterday about transitioning the PSTN to modern technology was aimed at separating the baby from the bath water. Yesterday’s workshop was a follow-up to a workshop last week that also looked at PSTN transition issues (CP: FCC workshop participants: Interconnection critical to PSTN phase-out).

Most of the people participating in yesterday’s workshop seemed to agree that certain things—such as the SS7 network and TDM interconnection--belong, sooner or later, in the bath water. But there was considerably less agreement about what constitutes the baby, with no definitive answers to questions such as whether carrier of last resort obligations should be preserved and whether copper loops should be retained for use by competitive carriers.

Far from reaching any kind of consensus or game plan, the workshop’s chief value was in highlighting issues that some might not previously have considered. Accordingly, I thought it would be valuable to readers to highlight some of the most compelling issues that came up yesterday.

Compelling issues
-- Today’s phone numbering system provides a way for callers served by virtually any service provider in the world to reach one another. What will replace that system has yet to be determined.

That’s what ENUM was supposed to do. But according to Tom McGarry of Neustar, ENUM is “widely used within networks but not between them” because it requires a global buy-in by global regulators, which has not materialized. “It collapsed under its own weight for that purpose,” said McGarry, arguing that we need an alternative that doesn’t require global coordination.


-- A new term to add to the PSTN transition lexicon is “corner case”—referring to an application that relies on today’s PSTN and is at risk of being painted into a corner as the PSTN transitions to newer technologies. Examples include security systems, text telephones used by deaf people and others.

David Young of Verizon said a good way to approach the PSTN transition was to make a list of corner cases and then determine how to address them. The term “corner case” seemed to resonate with workshop participants, several of whom picked it up and used it throughout the day.


John D. Schanz of Comcast puts great faith in gateways as mid-term solutions for interoperability issues between new and old communications networks. Schanz said he is confident that most interoperability issues can be solved through the use of gateways that allow disparate networks to co-exist during the transition.


Representing competitive carriers, Randy Niklas of XO Communication said existing telco copper loops “will be an important way to reach many subscribers for 15 to 20 years to come” and argued that “some degree of regulation or oversight should be brought to bear to [make sure CLECs] continue to have access to access networks.”


-- Some workshop participants argued that IP networks are more reliable than traditional communications networks because they have a higher level of redundancy. But others disagreed, noting that today’s PSTN is self-powered and less vulnerable to power outages.

Moffett’s wet blanket
Bernstein Research Analyst Craig Moffett found a whole new audience for his downbeat financial analysis of Verizon and AT&T at yesterday’s workshop. For at least a couple of years, Moffett has argued that landline voice service erosion is requiring the nation’s largest telephone companies to spread their largely fixed costs over a dwindling customer base, causing their margins to become increasingly narrow. Verizon doesn’t earn its cost of capital and AT&T is just above its cost of capital and is on a course to fall below, Moffett told workshop participants yesterday.


Moffett’s remarks underscore points made by AT&T nearly two years ago, when the carrier petitioned the FCC to be relieved of certain requirements associated with providing traditional voice service. AT&T argued that those requirements were becoming increasingly costly and impractical to meet (CP: AT&T and the end of POTS).

Yet despite the bleak picture that Moffett painted, he also noted that if there were to be a massive bankruptcy of a major wired telco or if one of those telcos were to say it was no longer viable to operate a network, the result would be economic catastrophe. “It would cause a catastrophic recession,” said Moffett. “Small and large businesses rely on [telco] services. It’s not as simple as saying ‘[This is] obsolete.’ It’s about how to manage a graceful transition from this set of services.”

Of all the workshop participants, Bernstein painted the most vivid picture of how critical it will be to undertake the PSTN transition—and also how important it will be to get it right.