End Of The Line For POTS?

by Sachin Balagopalan on November 17, 2008 · Comments

Plain Old Telephone Service (POTS) or the traditional “land line” as we know it might soon become a thing of the past in the U.S - at least by the end of Obama’s first term according to this prediction. I’m not so sure about that considering the sheer geographical size of the country and not to mention the pokiness displayed by the telcos when it come to rolling out new technology. I live in a town that’s just twenty minutes outside Boston - not exactly the boonies - yet I’ve been waiting for what seems to be like an eternity for Verizon FiOS to show up in my neighborhood.

In prime markets Verizon is replacing its copper infrastructure with fiber – one customer at a time; first are the most valuable customers but Verizon will move steadily down-market with its FiOS offer. FairPoint is making an impressive effort to add broadband access to areas where Verizon had not invested enough to make DSL work. FairPoint has also shown commendable willingness to move beyond traditional copper and use wireless to reach customers out of range of DSL. To compete with Cable’s triple play, FairPoint has a loose bundle with DirecTV.

I guess I’m not considered a “valuable” customer in Verizon’s eyes which is why I subscribe to Comcast’s triple play - Cable, Internet and VOiP. It’s definitely true that the cable providers have been weaning off customers from POTS by bundling VOiP with Cable and Internet and charging a flat rate for the bundle. This has significantly contributed to the decline in POTS subscribers. Customers like myself have an insatiable appetite for bandwidth and right now the cable company feeds my appetite as far as bandwidth is concerned. So if I have to pay slightly more for the bundle so be it.

The bigger issue however - in defense of the telcos - is the landmass. The United States compared to Japan for example has a large area of land and running fiber into every village, town and county is a daunting task to say the least. Having said that however….

… if there’s the political will-power to overcome the interests of those who have a stake in prolonging the declining status quo and postponing the future. For example, small rural telcos like the subsidies they get today and are not in as much immediate danger as their less-subsidized mid-sized brethren; they have substantial political clout with state and federal regulators. The duopoly of one large telco and one large cableco serving each area has resulted in some competition but not enough to stop Americans from having less bandwidth available at a higher price than most other developed countries. The duopoly has lobbyists to put it mildly.

Totally agree with the fact that the “pokiness” is attributed to politics more so than anything else. Specifically the Universal Service Fund (USF) which is utilized to subsidize mainly the rural telcos, it’s not surprising that they want to prolong the status quo.

The key here is competition and IMO the FCC needs to step in and foster that. An overhaul of the USF would certainly be a good start.

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