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AT&T Promises 4G Growth, Asks FCC for POTS Relief

Posted By Bob Ogle, Friday, December 7, 2012

The viability of POTS has been in decline for some time, as increasing numbers of customers opt for other types of telephone systems. Whether it’s fiber-optic, cable, cellular or some other mode, plain old copper just isn’t cutting it anymore – unless you live in a rural area, of course, or find yourself in the middle of a disaster like Hurricane Sandy, which sent many victims in search of traditional pay phones after more sophisticated technology had failed.

That’s why the Telecommunications Act of 1934 specified that telephone companies have a responsibility to maintain service to communities, unless the Federal Communications Commission (FCC) says it’s OK to stop. That places a burden on providers like AT&T and Verizon Communications to keep POTS going despite increased maintenance requirements and ever-declining profits from a shrinking group of potential customers.

AT&T took a step on Nov. 7 toward pushing POTS further into oblivion, asking the FCC to begin discussions about discontinuing support for POTS, replacing it with a 4G wireless network that will reach about 99 percent of the nation’s customers when combined with networks from other carriers. The news was buried deep inside a press release about AT&T "Project Velocity” initiative, in which 300 million U.S. customers will be covered by 4G LTE by the end of 2014. This represents an increase of approximately 50 million from the 250 million AT&T had promised by the end of 2013.

According to an analysis in the Wall Street Journal, the plan represents a compromise: AT&T will spend billions of dollars extending its wireless network to sparsely populated areas if the federal government will let it and other carriers off the hook from the regulatory burdens of supporting good old POTS.

This creates a conflict between critics who maintain that AT&T is abandoning its obligation to support POTS customers, and advocates who say that it’s unreasonable to expect AT&T and Verizon to keep pouring money into a network that is unsustainable in the long-term.

In an opinion piece on, analyst Harold Feld applauds AT&T’s willingness to make the investment, but notes a number of key issues, including:

  • What happens to the 1 percent of customers who still would not be covered by the expanded network, and who would be faced with an eventual loss of POTS? This potentially represents thousands of consumers who would lose access to basic telephone service.

  • Reliability becomes a factor. As noted earlier, there were multiple reports during Hurricane Sandy of victims whose wireless phones or IP-based services weren’t working. They were left searching for the nearest payphone, since POTS systems were largely unaffected by power outages. Copper is built to 99.9999 percent reliability, Feld says, and wireless and IP-based networks come nowhere near that standard.

Most parties seem to agree that a dialog about the future is a good thing. The sticking points are considerable, though, and a solution is far from clear. As the Journal points out, "The government is going to have to meet industry at least halfway in figuring out how to handle those who would be left stranded if a competitive industry were to build out its wireless and fixed networks only where some reasonable facsimile of the profit motive dictates.”

In other words: How can businesses still make money while providing communications services that customers rely on, and have been guaranteed for decades without forgetting about the rural 1 percent? And how big a role should government play in that solution?

One thing is certain: To reach its goal by the end of 2014, AT&T will have its hands full balancing its expansion into rural areas without sacrificing service or reliability.

Sources: Wall Street Journal, "AT&T Seeks a Lifeline on Land Lines”;, "AT&T to cover 300 Million Residents with LTE by the end of 2014”;, "Shutting Down the Phone System Gets Real: The Implications of AT&T Upgrading to an All IP Network.”

Tags:  ATT  POTS  telephones 

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