21st century needs new regulation for a new generation of telecommunications services

A major contributing factor to the current crisis over how to regulate Internet-based telecommunications is the passage of time. Lots of it. It's been more than four generations -- 80 years -- since the United States enacted the Communications Act of 1934 regulating telephone service as a common carrier utility.

A 1996 update of the statute incorporated Internet services. But they were so new then regulators -- the Federal Communications Commission -- didn't consider them as a common carrier telecommunications service. Internet was an optional additional service, accessed by special connections made over slow dial up modems to specialized information services such as CompuServe and America Online. Now two decades later, it serves as a all purpose telecommunications service providing data, voice and video over Internet protocol (IP).

In a little more than a month's time, the FCC will decide whether to regulate IP services as a common carrier utility under Title II of the Communications Act. Indications are it will do so -- most likely for landline delivered, premise Internet service. Along with the designation come rules designed to ease and promote the construction of infrastructure to serve all premises and not just selected ones as is the case under the present regulatory policy.

Twentieth century legacy telephone and cable companies have built their business models based on the current policy, models that will be disrupted with the shift toward regulating the Internet as a common carrier utility that must be offered to all and not just some Americans.

But out of disruption comes business opportunity for a generation of new providers. The federal government should put in place meaningful technical assistance and funding -- and not just "funding leads" given the importance of Internet infrastructure -- to help the new Internet telecommunications providers of the 21st century become established and financially viable for the long term.

The Great Wall of incumbent telecommunications infrastructure

Every divided territory has a boundary, border or wall mark its limits. Throughout much of the United States, it's that place where despite having plenty of existing infrastructure, incumbent telephone and cable companies draw an arbitrary boundary where the "footprint" of their landline telecommunications infrastructure capable of providing modern Internet service ends and the digital divide begins.

 
On the other side of the border, digital subscriber line (DSL) signals peter out and can't reliably provide service over twisted pair copper designed for a time when the Internet hadn't yet been conceived. There are also pockets of homes and small businesses in sufficiently close proximity of each other to qualify for cable Internet service, but do not because there are aren't enough along short spans of roadway between them and the wall's edge. Like border signs, the boundaries of these areas are often demarcated with utility pole advertisements offering those in the digitally deprived zone "New Super Fast Internet" that's actually substandard satellite service that should only be offered in the most remote and isolated areas of the U.S.

The U.S. Federal Communications Commission could tear down the wall by enforcing the universal service provision of Title II, Section 254(b) of the Communications Act of 1934 (as amended in 1996) that provides that access to advanced telecommunications and information services be available in all regions of the nation. Section 202 of the law also contains an anti-redlining provision barring providers from discriminating against localities in providing service.

Telcos’ copper cable plants deteriorate with no clear plans to replace them with fiber

A crisis affecting Americans who obtain premises telecommunications services (Internet, voice, and video) from legacy telephone companies has been slowly unfolding over the past 10 years. 

These companies’ copper cable plants are growing very aged and nearing the end of their useful lives with no clear plan to replace them with fiber optic cables.

The problem has worsened in the past decade as telcos have concentrated their infrastructure investments on mobile wireless services while all but ignoring their deteriorating landline cable plants. Much of it is in such poor condition that it can’t deliver any Internet connectivity or only marginally at sluggish speeds.

One strategy going forward is to sell as AT&T is doing with its Connecticut residential landline unit. However, in parts of telcos’ service territories where the copper cable plant is ancient and a fully depreciated asset, it’s questionable as to what value any potential buyer would see in such a deal.

A possible path to resolution of this crisis could come later this year if the U.S. Federal Communications Commission opts to subject Internet protocol-based services to common carrier and universal service requirements under Title II of the Telecommunications Act of 1934.