Saturday, April 24, 2010

Paradigm shift in telecommunications underway

As the legacy publicly switched telephone network (PSTN) becomes increasingly obsolete (it's in a "death spiral" according a pre-Christmas 2009 Federal Communications Commission filing by AT&T), regulators like the FCC are grappling with a paradigm shift in telecommunications.

The FCC's current regulatory framework is more oriented toward PSTN than the Internet that is rapidly replacing it. It too is growing outmoded, leaving regulators struggling to devise a successor.

And as FCC Chairman Julius Genachowski has noted, the FCC also faces a major challenge in figuring out how to best address market failure that has left at least seven million U.S. households offline according to the FCC's own estimates. At a time when the PSTN is replaced by the Internet, if you don't have an "always on" terrestrial Internet connection, you don't have modern telecommunications service. As PSTN becomes obsolete, so does the PSTN means of Internet connectivity: dialup access that was state of the art nearly two decades ago.

This is truly a time of major transition in telecommunications. As with any major shift, there will be a tension between those who want to hang on to the old paradigm -- in this case the legacy single purpose "telephone" and "cable" companies whose business models are based on billing for incremental services delivered over closed, proprietary networks -- and those who want speed the shift toward alternative business models based on open access IP-based networks.

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