Long Tail of Non-Adopters
Lack of Understanding & Awareness
Customers that are product life cycle laggards
Concerns about 911 reliability
Usability - how does it differ from POTS for the disabled
Compliance with other laws (TBD?)
Homeland Security Issues
Business Risk - impact of security vulnerabilities, network QoS, (e.g., delay, packet loss, jitter, echo) and reliability issues
Regulatory Uncertainty - to justify investment in networks for VoIP, need clear and predictably regulatory framework that helps provide an ROI estimate (e.g., will there be a migration or a sunset)
Resistance by incumbents and traditional mobile operators’ lobbying or avoidance
Cost and Capital Investment Considerations (e.g., retrofitting pre-end of life, PCOs (Private Cable Operators) with long term exclusive MDU contracts)
Special Impact of VoIP on Rural America
The US government should be very cautious about efforts to dismantle systems they have created or encouraged. History has shown that moving brashly to intervene in private markets can be disastrous, and the current effort to hasten the move from the PSTN telephone network to VoIP is fraught with danger.
While there are excellent technological and business arguments for the move in the long term, there will be serious and detrimental effects in the short term, particularly when it comes to rural telephony. If the Department of Commerce fails to consider these effects, the infrastructure of the nation both for telephony and broadband will suffer. These effects would be magnified in the event that the Department of Commerce initiates its efforts without coordinating them with the parallel efforts by the Federal Communications Commission to reform the Universal Service system.
The disaster scenario would be for the FCC to pull funding from the High Cost/Low Income program at precisely the moment that the DOC mandates an expensive move from PSTN to VoIP. Small, rural telephone companies at that point would be forced to implement an expensive and potentially unworkable VoIP upgrade while their primary source of revenue is pulled away to fund a wireless/cellular system that cannot hope to replace the present system in the near future.
We have had some experience with this reversal in government policy with regard to broadband Internet. In 1997 - 2000, the US government decided to bring "competition" to the dial-up Internet markets, and mandated a system of Reciprocal Compensation through which companies that had thousands of inbound calls and few outbound calls received untold millions of dollars in compensation. It took only a few weeks for Competitive LECs to realize that if they bought or formed ISP services, they could enrich themselves at the expense of the large national carriers. At its peak, this created more than 8,000 Internet Service Providers, many of them duplicating services within a given market. Competition thrived and costs were artificially low -- because they were subsidized by consumers through their telephone bills.
It was such a lopsided system that one CLEC in Maryland hosted an annual party featuring lobster and champagne. For free. They called it "The Party The Bells Paid For." The thousands of CLECs were, as former FCC Chairman Michael Powell termed them, “Competitors on life support.”
Eventually, the FCC realized what an enormous error they had made, dabbling in a free market place. And in late 2000, they reversed the Reciprocal Comp ruling. In the ensuing three months, thousands of CLECs -- which had existed only on government mandated payments -- went bankrupt. But they were not alone. The collapse of thousands of "telephone companies" also took down the fledgling Internet market, as investors realized that the loss of these companies also affected emerging Internet initiatives. And, as that market collapsed in the first "Internet Bubble," the entire stock market followed. Throwing the nation into a deep recession.
The question then becomes: Why do the US Department of Commerce and the Federal Communications Commission wish to wreak havoc on the telecommunications market and risk the destruction of that market in the midst of the worst economic climate of the past hundred years? What is the force that demands these shifts be made now? And are these agencies prepared to manage the consequences if this rash action again thrusts the nation deeper into recession and economic blight? Does the federal government wish to hasten the economic ruin of the American economy?
There are four elements that need more serious consideration before such actions are taken:
1) AT&T, in order to justify its merger with T-Mobile, has claimed that it will cover 95 percent of the nation's population with broadband via cellular. But this claim simply cannot be achieved in the near term. AT&T does not have the cellular towers, or the backhaul, to achieve this without investments measuring in the trillions of dollars. Even then, cellular broadband would be limited in both bandwidth and availability, and will hardly approach the robust broadband services delivered to rural customers today via wireline cable and telephony broadband services.
2) Even the FCC has not yet determined how to assure telephony and broadband services to rural populations if the government mandates either the replacement of PSTN networks or the elimination of the High Cost/Low Income programs through the Universal Service Fund. It is rash to mandate policy in the absence of factual research and evaluation to determine both the intended and unintended consequences of these actions.
3) Companies on one side of this issue are clamoring for change in both the USF and the transition to VoIP. But these are companies clamoring for changes that will benefit them financially, and giving them a competitive edge over existing carriers. The voice of low-income and rural consumers are not being heard in these proceedings. Neither are the voices of the small rural carriers, who largely cannot afford the lobbying costs of filing in these proceedings. Those who will be most affected by these potential changes are the ones who will not be considered in the final decisions.
4) The free marketplace works best without government intervention. While there is much evidence that it is time to shift the Universal Service Fund from telephony to broadband, doing so on a fast track will only spell disaster for the companies presently providing service to remote rural areas. Likewise, the marketplace is already moving from the PSTN system to VoIP, and does not require the heavy-handed intervention of the Department of Commerce to make progress in this transition.
It is the position of the US Internet Industry Association that the agencies of the US government should not intervene in free markets, and should not act precipitously in their approach to reforming the problems that their own policies have created. A free and unfettered marketplace is best able to serve the needs to consumers, and further meddling in that marketplace is ill-advised, with the strong potential for economic disaster.
State telecom association comments
Impact to Population Groups With Low Broadband Adoption
ENL (English as a new language)
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