AT&T and the end of POTS

When the FCC in early December put out a call for comments on the industry's move to an all-IP network (see FCC note here, in PDF form), it shouldn't have come as a surprise that it would hear back that carriers are rapidly moving to evolve their circuit-switched networks to IP.

In our January cover story on the "State of IP," for instance, we tracked the industry's move to IP in great detail.

But for some reason, seeing it on paper — in the form of an AT&T filing (PDF),  which, among other things, asked the FCC to help it put a "firm deadline for the sunset of the PSTN" — was still a bit of a shock.

AT&T summed up the problem it faces with its copper-based POTS network plainly: It is losing about 700,000 landlines per month; POTS revenue has fallen from $178.6 billion in 2000 to $130.8 billion in 2007; 22% of households have already made the move from wireline voice service to a mobile replacement; and the costs to maintain the copper POTS plant are rising, particularly because there are fewer customers to spread those costs across.

Said AT&T in its filing, "If broadband and IP-based services represent the future of telecommunications, the PSTN and POTS are now relics of an earlier era. The business model that sustained circuit-switched voice service over the last century is dying."

Besides the sentimental loss that the end of the circuit-switched POTS network represents, what is AT&T really saying in its filing? Two things:

One, IP is everywhere in the AT&T network: in the core, in the transport network and moving increasingly closer to the customer.

Two, as the industry evolves toward IP services and even more importantly to mobile (which is also increasingly IP-based), traditional regulations no longer make sense.

Both of these ideas have a grain of truth, but both are also fairly self-serving, especially in the context of a conversation with the FCC.

IP is going deeper into the network, yes.  But it is progressing pragmatically, and neither AT&T nor any other carrier is going to "turn off" any portion of the existing network before it makes sense to do so. On the regulatory front, as always, the issues are more political than technical. The flow of subsidies to keep basic phone service running for every community and subscriber has always been mind-numbingly complex. Carriers, competitors and even the FCC are forever gaming the current and future state of things like the Universal Service Fund, for instance, for maximum advantage.

AT&T argued that an all-IP network makes such schemes largely irrelevant, claiming that "if voice service becomes just another application on a high-speed, packet-switched network, then switched access charges, reciprocal compensation, and any other forms of intercarrier compensation will presumably disappear-along with the inefficiencies, regulatory disparities and arbitrage opportunities that currently accompany these charges."

That push and pull between the past and future of telecom technology — and the regulations that govern its deployment and use — is ultimately what the FCC and the industry will need to decide. Add those issues to questions of net neutrality, national broadband plans, and more and look for plenty of fireworks out of Washington, D.C, in 2010.