AT&T has a sneaky plan.
It wants to exploit a loophole in the Federal Communications Commission (FCC)’s rules to kill what remains of the public telecommunications network — and all of the consumer protections that go with it. It’s the final step in AT&T’s decade-long effort to end all telecommunications regulation, and the simplicity of the plan highlights a dysfunction unique to the American regulatory system.
AT&T and other big telecom carriers want to replace the portions of their networks that still use circuit-switching technology with equipment that uses Internet Protocol (IP) to route voice and data traffic. But because the FCC previously decided that it has no direct authority over communications networks that use IP, this otherwise routine technological upgrade could lead to a state of total deregulation.
We are already living with the consequences of the FCC IP decision: an uncompetitive broadband market. Our broadband providers enjoy the kinds of high profit margins that would make a 19th-century robber baron blush. And our ability to use these networks to communicate openly and freely is under constant assault. Meanwhile, consumers in other countries not only have better access, but they pay far less for far better services.
But there are large portions of the public telecom network that don’t use IP, and that are still subject to varying degrees of regulatory oversight — including traditional landlines, alarm circuits, and many of the “special access” connections that carry voice and data traffic from cellular towers.
Now AT&T wants approval to convert all of this to an all-IP system. And because of the FCC’s flawed view of IP, this move would jettison all of the public interest protections that govern common carriers like AT&T. (The centuries-old “common carriage” concept applied to entities like railroads, shippers, and telecoms that transport goods often using public rights-of-way; since these functions are critical to commerce, common carriers are usually regulated even if they don’t operate in monopoly markets).
The immediate consumer impact of AT&T’s proposal would be swift and severe:
Higher prices. Remember what happened after California partially deregulated AT&T in 2006? The price of some basic voice services tripled. AT&T wants to make this happen everywhere. Also, the ability of many smaller wireless carriers to offer competitively priced services is based on specific regulations that prevent special access providers like AT&T and Verizon from charging exorbitant rates. These protections against monopoly prices will disappear if AT&T gets its way.
Service disruptions. Brinksmanship between AT&T and smaller wireless carriers that use the public network to transport their own traffic would lead to telecom blackouts. Just look at how cable customers are held hostage in carriage spats between cable providers and content owners. The rules that require carriers to get networks back online after outages would also be history if the FCC approves AT&T’s petition.
Inequality and discrimination. Seniors, low-income families, and rural residents — all of whom are more likely to rely on fixed-line voice services or dial-up internet access — would especially feel the pinch. Carriers that are now required to offer universal service will be free to redline poor neighborhoods and disconnect consumers at will. Elderly grandmothers living on fixed incomes rely on rate-regulated landlines to stay connected, but they need not worry: AT&T has an expensive wireless plan they can purchase instead.
It’s bad enough that we’re on the verge of losing all of the consumer protections that keep the price of basic voice service reasonable and ensure the most vulnerable stay connected. But by putting the last nail in the coffin of the public telecommunications network, AT&T’s plan poses an even greater threat to the future of American innovation and internet freedom.
This is because the internet itself would not exist if it were not for a delicate balance of public policies that made sure the public telecommunications network was an open platform: Anyone could use it as a building block for innovation.
Before the FCC adopted rules to keep the public network open, companies like AT&T were able to prohibit customers from using the network for anything other than what it approved. (We wouldn’t have been allowed to have answering machines, for example, if AT&T didn’t approve them.) Thanks to the FCC’s intervention then and continuing oversight, Bob Kahn and Vint Cerf didn’t need AT&T’s permission to connect computers. They simply used the public network as a platform to launch the IP technology that led to the internet we all use today.
When Congress updated the Communications Act in 1996, lawmakers reinforced this clear separation between devices on the edges of networks and the wires that connect them. And this approach worked: Consumers had choices for cheap long distance. There were dozens of dial-up ISPs, and even multiple options for DSL and cable modem service. Prices dropped, quality improved, and investment soared.
While the rest of the world followed this American blueprint to great success, our captive regulators dismantled the competitive framework, replacing it with nothing more than the vain hope the market would sort it all out. So it should come as no surprise that the rest of the world is busy undertaking its own transition to all-IP networks without threatening the basic consumer protections that ensure universal access to essential communications services.
We stand at the edge of a cliff, and AT&T is eager to jump. It’s the FCC’s own bad decisions that led us to this cliff. But it’s not too late to step back. In updating its rules for an all-IP world, the FCC shouldn’t let the carriers kill off the public telecom network. We can protect consumer rights and free-market commerce without sacrificing the infrastructure’s open nature and its potential as a platform for innovation.