What Do You Mean The “End of the Phone System?” I Gotta Call Home for Father’s Day!

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A few weeks ago I went to a fascinating gathering of a few dozen academics, policy wonks, and others from the U.S.  and elsewhere to talk about the end of the phone system. While by no means a unanimous consensus, a very solid majority considered the phone system obsolete and ready for the scrap heap. This will come as a surprise to those of you who called home on Mother’s Day or who thanked God for a call center number when your broadband connection went down. But in fact, most of you are probably not using a phone service but a “phone service,” so we are half-way to shutting down the actual phone system anyway.

What is the PSTN and Why Should Anyone Care if We End It?

To unpack for those of you not full time telecom geeks, this revolves around the highly politicized question of the FCC’s authority over packet-switched services, especially those using Internet protocol (IP) packet switching, rather than some other technology. Right now, the FCC (and therefore most state-level authorities) distinguish between the “Public Switched Telephone Network” (PSTN) , the old technology that the FCC recognizes as a “telecommunications service,” and "voice over IP."  The FCC has very clear and explicit authority over the PSTN, and all the rules governing phone services apply to the PSTN. That thing your phone company provided over copper? The one with an independent power supply that always works the same way, reaches everybody else, and has all kinds of rules about how phone companies can bill you? That is the PSTN and is an actual phone.

The other category of service looks like a phone and gets sold like a phone, but is actually voice over IP (VOIP) and therefore not an actual phone but a "phone service." The thing you get from Comcast or Time Warner Cable as their digital voice service uses VOIP. My FIOS digital voice is VOIP. The FCC refuses to say whether these services are actually phone services, but wants to give them the privileges of phone service (like getting a phone number) and some of the responsibilities (like 911). But all the basic consumer protection stuff that has traditionally gone along with being an actual phone service doesn’t apply to VOIP "phone service."

To the extent the FCC does assert authority over VOIP services (primarily to give them goodies), the FCC does so through its authority over the PSTN. For example, when we wanted to make it possible for cable operators to compete with traditional phone companies, we said phone companies had to “port” numbers and give interconnection to VOIP providers that wanted it even though VOP providers aren’t actual phone services. OTOH, because nothing in the current Communications Act says that VOIP is not a phone service (and some of the language would seem to indicate it really ought to be a phone service), the FCC has not declared that VOIP is an "information service" like your cable modem or DSL line. In particular, VOIP that can reach real PSTN phones or receive calls from PSTN calls (what we call "interconnected VOIP") exists in a no-man's land as neither a regulated Title II telecommunications service or a Title I unregulated information services, and the FCC regulates it under its "ancillary authority" as ancillary to the PSTN.

All Very Interesting, But I Still Don’t Understand Why I Should Care If The PSTN Goes Away.

Since all FCC authority over anything vaguely IP related depends on it being “ancillary” to or “interconnected with” the PSTN. what happens when we no longer have a PSTN and the only (or primary) phone services are IP-based “phone services?” Can I still port phone numbers from Verizon to Comcast? Does AT&T have to complete my calls to another network? Am I still protected by the various rules that protect my privacy or prevent “slamming” or “cramming” (or keep me on the “Do Not Call Registry”)? No one knows. 

Under the existing law as set forth in the Communications Act of 1934, one of two things appears most likely when we shut off the PSTN and "End The Phone System.." Either “phone services” become actual phone services (because, in the absence of the protocol conversion between the PSTN and IP networks, these services meet the statutory definition of telecommunications service (47 U.S.C. 153(53)), or nothing is a phone service and the underlying basis for existing FCC regulation of these services disappears – along with the FCC’s authority over “phone service” (such as it is). For those of you applauding the possible end of any FCC jurisdiction over phone service and the death of all that old nasty bad-bad monopoly era regulation with no place in uber competitive modern telecommunications market, that also means good bye to things most people in the industry basically like, such as interconnection requirements, number portability, and Universal Service Fund money, to name a few. It also gets rid of various consumer protection rules (which you may or may not consider a plus).

In particular, if you live in a rural area, you are likely to have serious problem getting folks to serve you because the current rules that require them to serve you will go away and -- I know you don't realize this -- you are actually an expensive pain in the rear-end to serve. You get service from a combination of subsidies and a requirement called "carrier of last resort" (COLR), which means that the phone company authorized to serve the profitable part of the franchise area has to serve the hard to reach and expensive to serve rural areas as well. The switch to VOIP has already created problems for rural areas as carriers try to avoid paying the expensive charges that subsidize rural service, leaving some rural areas unable to receive incoming calls. While the FCC did issue an Order clarifying that carriers must actually complete calls to rural exchanges, that order rests on the FCC's authority over the PSTN and its ancillary authority over interconnected VOIP. What happens when we have no PSTN and VOIP is no longer interconnected with anything other than more VOIP? No one knows.

The switch also potentially creates problems for Universal Service Fund (USF), including the Lifeline/Linkup program which serves low-income folks in urban as well as rural areas. Lifeline/Linkup and the High Cost fund for rural service, by statute, apply to PSTN/Telecom services. To the extent the FCC is trying to repurpose then for broadband, that's only as ancillary to the FCC's Title II telecom authority. What happens when we don't have any Title II telecom services because only the PSTN is telecom and it gets phased out? No one knows.

And last but not least, the phase out of the PSTN creates real questions about the future of wireless. Mobile phones are common carriers only so long as they interconnect with the PSTN (or at least, that is how the FCC currently interprets 47 U.S.C. 332). What happens when we no longer have a PSTN, or when the primary exchanges of traffic between wireless providers like AT&T and Verizon are between VOIP providers like Comcast and Vonage? What happens when the wireless providers get in on the act and do voice over LTE/mobile VOIP? No one knows.

So Where Are We Now? Do I Start Filing Comments Or Something?

From a policy perspective, the conversation is just starting and we are unlikely to come to any kind of consensus on rules at the federal level anytime soon.  So if you need an FCC rulemaking to get excited, relax. OTOH, the shape of the policies we will ultimately adopt will be formed well before we ever get to the rulemaking stage. Rulemakings on major issues like this don’t just magically appear one day. They come about from the accumulated conversations and consensus of the stakeholders who are plugged in enough to participate in the initial conversations. So all these discussions and conferences and academic papers are pretty important. Meanwhile, policy continues to get pushed through on the state level, based on all kinds of assumptions that are convenient to some participants but which ignore the broader federal debate.

For example, ask the legislators in California currently rushing to deregulate all VOIP services what happens when everything is VOIP in 2018 and rural Californians can't get service, I'm willing to bet you'll get a blank look. "What do you mean we're ending the phone system?" They are likely to ask.  "We're just protecting the exciting new competitive VOIP services from evil nasty bad-bad regulation. Everyone will still have phone service." Except they won't. They will have "phone service." And if the California Bill (called S.B. 1161) passes, California residents with "phone service" will be "out of luck" if they have any problems with their "phone service" because no one will have authority to fix the problems. 

So while the debate on the End of the PSTN is only just starting, it already has real world implications. Continue to watch this space and we at PK will continue to explore the ramifications of “shutting down the phone system.” When the time comes to make your feelings known, you’ll be ready. (And if you’re in California, that time is now for SB 1161, given that it passed the CA Senate last week. You can find out more about S.B. 1161 and how to make your voice heard from Media Matters and Free Press.)

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