AT&T will spend $14 billion on its wireless and wired broadband networks in an effort to improve service for its urban and suburban customers, while preparing to argue its case for disbanding parts of the century-old landline network.

In a major 90-minute presentation with most of AT&T’s top executives on stage, the company announced its intention to move away from traditional landline service and towards a combination of an enhanced broadband platform and 4G LTE wireless access, especially in the 22 states where it currently delivers landline service.

The investment plan — Project Velocity — is a pivotal moment for AT&T, which has seen deteriorating revenue from its aging rural landline network and has focused most of its investments in recent years on its increasingly profitable wireless network.

But AT&T also hoped to hang on to the enormous revenue it still earns providing traditional home phone service. Its early answer for landline cord cutting came in 2006 with U-verse, an IP-based network platform on which AT&T can sell video, voice, and broadband service with a minimum of regulatory oversight. U-verse succeeded attracting high-paying customers who either stayed with or returned to AT&T. But now company officials hope U-verse can help the company achieve victory in its next public policy fight: to abandon traditional landline service altogether.

That emerging battle is likely to pit urban and suburban customers enjoying enhanced U-verse service against rural AT&T customers deemed unsuitable for wired broadband. AT&T is seeking to decommission up to 25% of its rural landline network as part of the strategy announced today, shifting affected customers to its 4G LTE wireless voice and broadband service, which comes at a higher cost and includes draconian usage caps.

Critics contend such a move could leave AT&T largely unregulated with monopoly control over its networks, with few service requirements or access concessions for competitors. It would also leave rural customers relegated to a wireless Internet future, perhaps permanently.

Landline/Wired Broadband: Good News for Some, Scary News for Rural America

AT&T plans to expand and enhance its broadband network to 57 million consumers and small businesses across its 22-state operating area, reaching 75 percent of customers by the end of 2015. AT&T will operate three broadband networks going forward, while gradually decommission its existing ADSL network.

• U-verse: AT&T’s triple play package of TV, Internet, and Voice over IP phone will be expanded by more than a third to reach an additional 8.5 million customers by the end of 2015. This will make U-verse available to 33 million customers in AT&T home phone service areas. Most of the expansion will be in urban and suburban areas bypassed during the initial U-verse construction phase. To remain competitive, AT&T will also increase available broadband speeds for existing customers up to 75Mbps;
• U-verse IPDSLAM: An additional 24 million customers will be offered a combo voice-broadband package that could be called “U-verse Lite.” It will offer speeds up to 45Mbps and is primarily intended as a replacement for the company’s DSL service in exurban and semi-rural areas. Arrives by the end of 2013;
• Fiber to Multi-Tenant Business Buildings: AT&T plans to expand its fiber network to reach more commercial buildings, but also lay the foundation to use these facilities for future distributed antenna systems and small cell technology that will create mini-cell sites serving individual neighborhoods, cutting down the demand on existing cell towers.

Customers living in rural, open country in AT&T service areas in states like Texas, northern Mississippi, western Tennessee and Kentucky, central and northern California and Michigan, and the rural areas of the Carolinas may eventually find themselves using AT&T’s wireless network as the company seeks to decommission its landline infrastructure.

A number of AT&T customers living in areas shown in red may see red if and when AT&T begins trying to force rural Americans to its more profitable wireless networks.

But AT&T officials also admitted in a Wall Street Q & A session that the company planned nothing special for rural landline customers transitioned to wireless. Those customers will be sharing service with traditional mobile customers. If AT&T’s service plan resembles that of Verizon, customers will pay around $60 a month and limited to just 10GB of usage per month. If AT&T decommissions its existing landline infrastructure, no other wired provider is likely to take its place.

Most remaining regulations enforcing a level playing field for telecommunications networks remain with legacy copper-wire landline Plain Old Telephone Service. AT&T’s plan would effectively banish that network in its entirety through a series of regulatory and service-transition maneuvers:

• U-verse customers actually no longer have traditional landline service. U-verse offers barely regulated Voice over IP service, free from most state regulations and pricing oversight;
• U-verse IPDSLAM customers will also quietly forfeit their traditional landlines. This product works over an IP network, which means telephone service is Voice over IP;
• Wireless service is already barely regulated and not subject to price oversight or universal service requirements that landline providers must meet to deliver service to all Americans.

AT&T proves you have to spend money on network upgrades to make money from customers purchasing the enhanced services they offer.

4G LTE Mobile Broadband: 99% Coverage Across 22 AT&T Landline States, Up to 300 Million Americans Served by the End of 2014

The majority of AT&T’s planned investment in its network will once again go to its highly profitable wireless division. At least $8 billion will be spent on bolstering AT&T’s 4G LTE wireless coverage area, especially in rural sections across its 22 state landline service area. That investment is necessary if AT&T hopes to win approval to decommission traditional landline service for rural customers.

• 4G LTE Expansion: AT&T plans to expand its 4G LTE network to cover 300 million people in the United States by year-end 2014, up from its current plans to deploy 4G LTE to about 250 million people by year-end 2013. In AT&T’s 22-state wireline service area, the company expects its 4G LTE network will cover 99 percent of all customer locations;
• Spectrum: AT&T continues its acquisition binge with more than 40 spectrum deals so far this year. AT&T’s biggest win of the year was approval for new WCS spectrum it will occupy alongside satellite radio. AT&T will have accumulated 118MHz of spectrum nationwide.
• Small Cell Networks: AT&T has already aggressively deployed a large number of Wi-Fi hotspots to encourage customers to shift traffic off its traditional wireless network. The next priority will be deployment of small cell technology, macro cells, and distributed antenna systems that can offer neighborhood-sized cell sites to serve urban and suburban customers and high density traffic areas like shopping malls and entertainment venues.

AT&T’s wireless 4G LTE upgrades will cover 99% of the service areas where the company provides landline service. It has to offer blanket coverage if it hopes to win approval for decommissioning its current legacy landline network in rural America.

Using New Infrastructure to Drive New Business and Even Higher Revenue

AT&T would have had a hard time selling its planned investments to Wall Street without the promise of new revenue opportunities. AT&T’s new network enhancements will support a range of new services the company hopes to introduce to win greater revenue in the future:

• AT&T Digital Life: A nationwide all IP-based home security and automation service set to launch in 2013 that will let consumers manage their home from virtually any device — smartphone, tablet or PC.
• Mobile Premise Solutions: This new nationwide service, available today, is an alternative for wireline voice service and in the future will include high-speed IP Internet data services.
• Mobile Wallet: AT&T is participating in the ISIS mobile wallet joint venture. Market trials are underway in Austin, Tex. and Salt Lake City today.
• Connected Car: More than half of new vehicles are expected to be wirelessly connected by 2016. AT&T is positioned to expand from vehicle diagnostics and real time traffic updates to consumer applications that tie into retail wireless subscriber data plans. AT&T already has deals with leading manufacturers such as Ford, Nissan and BMW.

AT&T’s 2012 Investor Conference introduced major transformative changes for AT&T’s wired and wireless broadband networks.  (2 hours, 9 minutes)

Will be available to 8.5 million additional customers by the end of 2015

AT&T will spend $6 billion over the next three years to upgrade broadband speeds across its 22 state operating service area and further expand its U-verse broadband platform to reach suburban and exurban customers stuck in the DSL broadband slow lane.

AT&T today announced existing U-verse customers will be able to buy upgraded speeds as high as 75Mbps by the end of 2013, with speeds increasing to around 100Mbps further out. AT&T’s current U-verse platform is currently constrained with maximum speeds of around 24Mbps.

Customers currently bypassed by AT&T U-verse may still have a chance to get the service in their community. AT&T announced plans to expand the fiber to the neighborhood service by more than one-third, with an additional 8.5 million customers able to sign up by the end of 2015.

AT&T also announced an eventual replacement for its existing ADSL platform, which currently offers speeds ranging from 768kbps to around 12-15Mbps in certain areas. The company’s lighter version of U-verse, dubbed U-verse IPDSLAM, will be introduced to 24 million AT&T customers in smaller communities by the end of 2013. Customers will be offered phone and Internet service over the network — but not television — with broadband speeds up to 45Mbps.

About 25% of AT&T’s rural customers will not see any upgrade to their current landline service. Instead, AT&T announced it will seek to gradually decommission rural landline networks and transfer those customers to its 4G LTE wireless service for both broadband and voice service, pending regulator approval.

Short on specifics, AT&T did not say whether rural customers will face the same broadband usage caps that are familiar to other AT&T wireless customers.

AT&T plans to upgrade its broadband speeds using a combination of technologies:

• Pair bonding existing copper wiring to get additional bandwidth;
• 17MHz: Devoting six frequency bands to broadband, up from the current four;
• Vectoring: Using technology to reduce or eliminate speed-robbing crosstalk noise on existing lines;
• Additional Copper Wire Reductions: Bringing fiber further into neighborhoods to reduce the distance of copper wiring between your home and AT&T’s network;
• Using “rate-adaptive” technology to let equipment select the fastest possible speeds with a tolerable error rate.

A very frustrated employee of Frontier Communications working in one of their Ohio offices sent Stop the Cap! a detailed report on some of Frontier’s problems with customer service, unfair fees, and other horror stories. Over the next several days, we will present excerpts of this very long and detailed open letter, starting with what it is like to work in a Frontier customer service center dealing with customers unhappy with Frontier’s way of doing business. (Stop the Cap’s comments appear in italics.)

I work for a company that I am, quite frankly, frustrated with. The company is Frontier Communications.

I am currently an employee in the Marion, Ohio office/call center, and I am a customer service representative. I handle everything in terms of selling services, troubleshooting issues with telephone service, writing orders, setting up payment arrangements, etc. We occasionally refer to ourselves as universal service representatives. The latter title would admittedly sound better on a resume if my company were to ever find out that I had wrote this and fired me. So, after spending a long while working for this company I have learned a lot. I have taken every type of call that there is to take out there, ranging from a simple billing issue to someone getting absolutely screwed because of a mistake one our other representatives made.

I understand that when you have a customer base of three million residential accounts that you will take some angry calls, statistically speaking. It happens. I imagine that happens with every company out there, whether it sells phone service or a t-shirts. You will eventually run into a dissatisfied customer. I feel with Frontier, it happens way too often.

First off, before I go any further, I would like to say my supervisor and director are very knowledgeable individuals, and in no way am I implicating them in this open letter. They do their best to curb ignorance and poor customer service. I feel that the company limits their abilities to do even more to make customer service at Frontier a much more honest experience. Even the director of our call center still has to take orders from someone.

Frontier’s Shock and Awe:  The $200 Early Termination Fee for a Two-Year Contract Customers Never Realized They Had

Frontier’s early termination fees and contracts often come as a surprise to customers who had no idea they signed up.

I have noticed a lot of people calling in (and leaving comments on numerous review sites, as well as our Facebook page) voicing their displeasure about suddenly finding out that they were in a two-year contract, unable to cancel their services without incurring a 200 dollar early termination fee (ETF). This is something that I hate to deal with, as there are almost always no notes on any of these accounts left by previous representatives indicating they informed the customer of an ETF. Unless it is a special circumstance, we are supposed to tell you that you are notified on every billing statement that you are in a contract, and there is nothing that we can do to waive your fees. Most of the time, if a customer is persistent, they can actually escape and have these fees credited.

Firstly, the systems we use to write orders (Salesforce and DPI — yes, we have two different and completely redundant systems that serve the same function — one just looks prettier) both automatically default to the option of a 1 year contract with the option of automatically renewing that contact indefinitely. Frontier does offer a no-contract plan, but then you will fail to receive any sort of promotional pricing. So, a rep will write an order, complete it, and most of the time fail to review with the customer they are agreeing to a one year contract. We get a LOT of these types of calls, the majority originating from orders written by our service center in DeLand, Fla. What frustrates me is the lack of protocol that makes sure a rep notifies the customer that they are indeed being put on a contract. The calls are recorded and could be reviewed, but there are still too many of these people who fly under the radar and get stuck with a fee when it is too late to opt out.

It sucks to no end to have to tell somebody that they will have to spend an extra $200 to cancel their phone and Internet service, and many are left bewildered over the fee. It is always  hard to tell who has really been screwed and who is trying to dodge an ETF. So we handle it with our gut. That’s the best we can do.

Once a Frontier Customer, Always a Frontier Customer… Unless You Pay and Pray

Frontier works hard at holding onto the customers they have, either with long term contracts with heavy early termination penalties or other tricks and traps that can make departing Frontier a difficult and costly ordeal. In addition to term contracts, Frontier heavily markets extra services they claim will protect your account from mischief, but in reality makes it much more difficult to switch phone companies or terminate landline service.

Locking your phone number from third party transfers also buys you a headache if you want to switch providers.

When a Frontier rep asks you to put a free service on your account that will make sure nobody else can steal it without your permission, most people agree to it. This is called a Primary Local Exchange Carrier Freeze. Representatives have an incentive to push this free service, winning a $3 bonus to our commission if you let us add it to your account.

This service makes sure any third party companies cannot port your service over to theirs without your permission. Even with your permission, they still can’t do it until a Frontier rep removes the freeze. That requires customers to call in and speak with us. This gives us a very valuable opportunity to rescue your business and get you to change your mind. Customer retention is vital, which is why Frontier pays us extra to push a service that costs you nothing.

If a customer insists on “porting out” — keeping their current phone number but moving service to a new provider — we will remove the freeze on your account, but you will pay us for doing it.

It does not cost Frontier anything to remove the freeze, but we now charge customers a $1 fee to change your provider. Want local service with one company and long distance service with another? We charge $1 for each.

When customers accept our offer to place a freeze on unauthorized third parties messing with your phone service without your permission, we are required to obtain third party verification of your desire to have this service. Frontier uses an independent verification company that is god-awful and treats customers rudely, even yelling at some who do not follow the precise verification procedure. If they don’t like your answers, the order will not go through.

Their treatment of our customers reflects poorly on Frontier, especially when a customer’s order to obtain service never gets beyond the verification process.

I’ve heard these reps rip into customers for not answering with a “yes” or “no.” In one case, a gentleman from South Carolina had simply wanted to make sure that telemarketing calls would not screw with his phone bill/service, so I offered a freeze to ease his mind. I was absolutely appalled when he was asked by the third party verifier if he authorized the changes and he replied with the usual southern-accented “ya” and the woman on the other end literally yelled at him for not answering “yes.” The customer was completely taken aback and abruptly hung up. I would have too.

As a result, I often do not bother to include line freezes on larger orders, fearing the unprofessional attitude customers might endure could sabotage my commission and the customer’s scheduled service date. I wish Frontier would utilize a different company to process and verify orders.

So You Are Leaving? Do Exactly What We Say or Lose Your Phone Number

Listen very carefully

Oh boy, do I LOVE number porting. Of course that is absolute sarcasm. So, a port-in/out on paper sounds like a rock solid type of deal. The customer can retain his or her phone number, and check out the grass on the other side, greener or browner.

The process for handling a port-in is also fairly simple, and you would think that this would not be an issue for the customer to worry about. Of course, I wouldn’t be venting about it if this were always the case.

One big mistake routinely made by Frontier and other companies is cancelling your existing telephone service before the number port is complete. Some customers want to hurry the divorce and take it upon themselves to terminate service with their old provider as soon as the new service is turned on.

Under no circumstances should you do this, as it will absolutely screw you out of keeping your phone number. This is basic knowledge instilled in every Frontier rep during training, yet screw-ups still happen when one of our reps cuts off service before the other company has taken ownership of your phone number. That means your number is gone. Sometimes the porting process takes as long as 60 days to go through, so please be patient.

Unfortunately, with no system in place to prevent ignorant reps from screwing things up, numbers get lost. Sometimes it is our fault, sometimes it is with the customer, other times the new company created the problem. But we are often the ones left to explain to a customer the phone number they have had for 40 years is gone for good.

But it can get worse once someone else randomly grabs your old number. Imagine what happens when a grandmother’s lost number is reassigned to a porn smut peddler. Now some porn shop down the way has grandma’s number. This actually happened to a customer of a major cable provider. Imagine her friends and family trying to get her only to reach these people instead. It’s not a fun mess to clean up.

Coming Up: Wheel of Installation & Modem Fees, Adventures With Missed Appointments & Lost Trouble Tickets, and Big Trouble in Little DeLand

November 7 will be an important day if you are a rural AT&T landline customer. On that date, AT&T, in concert with Wall Street, plans to announce the future of its rural and “tier two-smaller city” landline business.

The implications for customers are enormous. AT&T could elect to exit and auction off its rural customers to companies like Windstream, Frontier Communications, CenturyLink, and FairPoint Communications. AT&T could also announce it will aggressively petition the Federal Communications Commission to decommission its copper landline facilities in favor of a new wireless IP network based largely on its national 4G LTE expansion, or it could be a combination of both: keeping existing landline facilities but transitioning them to Voice over IP technology with a gradual shift towards wireless.

AT&T CEO Randall Stephenson delivered important clues about the company’s direction in remarks at yesterday’s Goldman Sachs Communacopia Conference, attended primarily by Wall Street investors. Stephenson drew clear distinctions between valued customers in areas upgraded to AT&T’s U-verse platform and more problematic customers in smaller communities where AT&T refuses to invest in landline upgrades.

“Where you look at the footprint where we have deployed U-verse technology we do very well,” Stephenson said. “In fact we are the share leader in virtually all U-verse markets. Those markets grow nicely. Where we have not deployed fiber and U-verse technology, we are losing share and those markets are in decline and that is the whole reason behind this analysis and evaluation that we will be laying out Nov. 7. What do we do with those markets? Because we have demonstrated if you go invest you can grow the market.”

Stephenson

“We said coming into the year that we have to find a broadband solution for these assets that is cost-effective or we need to look at selling them,” Stephenson said. “I would just tell you at the 30,000 foot [line length] level we think we’re finding line of sight to some investment theses here. We can get a good competitive broadband product to a large portion of our footprint and would avoid us having to go through a number of regulatory approval processes to sell [landlines] across a large geography. There will probably be a mix of actions here, but the bottom line is we think we may have line of sight but we will flush that out on Nov. 7 in an analyst conference here in New York.”

Early indications suggest the company is considering deploying DSL extenders to reach a larger share of rural customers without a complete overhaul of its copper wire network. The upgrades could deliver results similar to what Frontier Communications has been doing in territories it acquired from Verizon Communications, which includes extending fiber optics further into neighborhoods and finding ways to reduce copper wire length to improve speeds. Frontier has set its sights on delivering up to 25Mbps over copper landlines, a speed it feels is competitive with cable broadband. AT&T could come close to these speeds without the amount of investment required in a typical U-verse deployment.

But just as likely is a largely wireless broadband solution to replace the company’s aging copper wire-based DSL service. Stephenson says he strongly believes that a wireless solution exists for rural America over the company’s new LTE 4G network.

“I don’t envision in major metropolitan dense population centers that LTE will serve as a broad-based fixed-line replacement or surrogate,” Stephenson said. “I do believe in less dense markets and especially when you begin to think about rural America and tier two towns, that LTE can become a fixed line replacement or even better than what you can get in fixed line out in those markets. This is one of the exciting things about the WCS spectrum [AT&T plans to acquire]. It allows you to truly begin to think about investing in and doing this.”

But AT&T’s solutions will come with strings attached: a lobbying effort to get the FCC to loosen up on regulations, acquire more wireless spectrum, and allow the company to dispose of its landline infrastructure.

“You don’t go out and put in LTE capability in rural America and leave up all your copper infrastructure in the long haul,” said Stephenson. “It just wouldn’t make sense to do both. So this is the big regulatory issue. The FCC would require us to leave that copper and TDM fixed-line infrastructure up by some mandated rules and you can’t do both. You can’t support both infrastructures. We have got to work through the regulatory implications of this, but I think LTE can prove over time to be a fixed line replacement in rural and less dense populations. I think in a five year time horizon that can become significant.”

Thus far, AT&T has been unwilling to consider upgrading smaller communities to its U-verse platform, primarily because of the cost and return on investment. The company is content with its current U-verse footprint and has begun to enjoy increased wireline margins from a growing number of urban customers as programming costs decline.

LTE: AT&T’s wireless rural broadband solution?

“The U-verse margins continue to expand,” Stephenson noted. “U-verse is one of those where you go make a really significant capital investment and then you go in as a new entrant to do programming contracts and you’re paying multiples of what the big scale guys are paying and then as you scale that over time then margins really begin to expand. We’re riding that right now and we’re getting really good margin expansion just out out of scaling U-verse and getting better economics on content terms as well.”

Wall Street has been applying pressure to Stephenson to extract higher margins and cut costs from its traditional landline business. Stephenson sought to placate concerns about the cost profile of AT&T landlines before investors.

“We have done a nice job controlling our labor costs and that has been very helpful to continue to sustain margins in the fixed line business,” Stephenson said. “Those labor costs savings we take and reinvest back in the business in the form of U-verse and looking at some future investments as well.”

Stephenson hopes the FCC will eventually let AT&T abandon traditional landline service everywhere, which could also deliver serious cost savings for AT&T.

“I do believe if we can find a path to an all-IP infrastructure in not just your major metropolitan areas but your tier two markets there are significant cost savings in the five or six year time horizon that could come out of these businesses as well,” he noted.

AT&T CEO Randall Stephenson took questions at Goldman Sachs’ Communacopia Conference about its wireless network and the future of the rural landline business. (September 19, 2012) (41 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

AT&T has sent the Federal Communications Commission a bait and switch checklist that, despite the stated purpose of modernizing telecommunications networks, would also allow the company to completely abandon its landline network and win near-complete deregulation of its broadband service.

On Tuesday, August 28, Christopher Heimann and I met with Matthew Berry and Nicholas Degani, respectively Chief of Staff and Legal Advisor to Commissioner Pai, to discuss actions the Commission can and should take to facilitate the retirement of legacy TDM-based networks and services and transition to an IP-based Network/Ecosystem, consistent with federal policies and objectives, including those enunciated in the National Broadband Plan.

At the request of Commissioner Pai, AT&T has prepared and is submitting herewith a checklist of those actions, which identifies the critical first steps the Commission should undertake without delay to begin the transition as well as additional steps that would facilitate completion of that transition.

Under the existing statutory and regulatory framework, carriers already can undertake the steps necessary to make the transition, including, in some cases, steps requiring Commission approval (such as withdrawing legacy TDM-based services). But, insofar as the transition raises a number of novel and likely contentious issues, Commission action on the items included on the attached list would greatly facilitate and thus hasten completion of the transition. The steps we identify implicate an array of issues raised in the above-referenced dockets. Accordingly, we are filing the checklist in each such docket.

Respectfully submitted,

Robert W. Quinn, Jr.

AT&T’s letter and attached checklist are documents only a policy wonk or careful observer of Big Telecom could easily navigate. Despite the thicket of opaque terms like “TDM” and the not-immediately-apparent importance of the difference between an “information service” and a “telecommunications service,” AT&T has, to borrow a phrase from President Obama, some brass ones making its intentions perfectly clear.

With the help of Bruce Kushnick, executive director of New Networks Institute and a former telecom industry insider, we will guide you through AT&T’s filing and what it really means.

AT&T lists several “critical first steps” (we have put them in bold) to achieve the transition to an all-IP telecom world, retiring the traditional “public switched telecommunications network” (PSTN) which you know better as a landline.

1. Establish a date certain for an official TDM-services sunset, after which no carrier would be required to establish and maintain TDM-based services/networks, and purchasers of such services (including circuit-switched and dedicated transmission services) would have to switch to IP or other packet-based services.

No casual observer of FCC filings would be expected to understand the implication of setting a date to officially sunset “TDM services.” TDM is synonymous with the landline network Ma Bell established more than 100 years ago — the one that gives you a dial tone, DSL, and access to dial-up Internet where broadband is unavailable. AT&T wants the FCC to manage what the company has not been able to consistently accomplish on the state level: setting a final date when traditional landline service can be permanently disconnected, preferably at the convenience of the phone company.

2. Clarify that any state requirements forcing service providers to maintain TDM networks and services […] following the TDM sunset are preempted. Such requirements could deter investment in broadband, and thus are inconsistent with and pose an obstacle to federal law and policies encouraging the transition to all IP networks and services.

This provision would effectively eliminate any existing state laws or regulations that require AT&T to deliver a fairly-priced, well-run landline service for customers throughout its service area. Some states have not bought into AT&T’s lobbying juggernaut, often delivered with the help of the American Legislative Exchange Council (ALEC). Despite the enormous sums spent lobbying legislators, some states have kept oversight in place requiring AT&T to serve everyone that wants phone service. With this provision, those state laws and regulations would be pre-empted.

AT&T claims state requirements somehow deter broadband investment, a curious conclusion considering AT&T has already largely ceased its expansion of DSL and U-verse services.

3. Complete action in the IP-enabled services proceeding, and classify such services as information services, subject to minimal regulation only at the federal level. The Commission could permit service providers to offer DSL or other broadband transmission services on a common carrier basis if they so choose, but in no event should a provider be required to do so. 

Quinn

This is AT&T’s provision to kill regulation and destroy competition. Government rules, regulations, and oversight apply largely to “PSTN” landline services, not to IP-based or broadband networks. Basic landline service is designated a “telecommunications service” by the FCC, which makes it subject to regulator review. Broadband, on the other hand, and anything else using IP, is typically classified as an “information service,” where most oversight regulations do not apply.

AT&T’s plan is to shut down today’s landline “telecommunications” service in favor of IP-based Voice over IP, which would effectively reclassify your phone line as an “information service.” That means by changing just one word — “telecommunications” to “information” — AT&T can walk away from a century of basic consumer protection rules and regulations. AT&T also gets a divorce from its telecommunications service obligations as a “common carrier,” which requires AT&T to deliver service to any customer who requests it, at a fair and reasonable price, without changing its form or content.

If AT&T’s broadband networks were reclassified as a “telecommunications service,” Net Neutrality would be easy to enforce under the “without changing its form or content” provision of common carrier rules. Back in the 1996 Telecommunications Act, AT&T’s lobbyists had already made their mark, creating new “distinctions” of telecommunications services, some more regulated than others. Now AT&T is back to kill off the last regulatory obligations it still has to endure, taking Net Neutrality to the grave once and for all.

4. Reform Interconnection – after the official date for the TDM sunset, no carrier or other provider of TDM based services should be entitled to require others to interconnect in TDM. The Commission should take action to maintain the market-based, regulation-free interconnection regime that has applied to IP-based interconnection for decades.

[…] Reform wholesale obligations under section 251/271 to eliminate unbundling, resale, collocation and other requirements that could require ILECs to maintain TDM networks and services.

These particularly opaque sections give AT&T’s competitors real nightmares because they would wipe out requirements that phone companies open certain facilities to competitors who deliver services over AT&T’s network. If AT&T’s recommendation is adopted, no competitor would be safe if AT&T eventually padlocks access to its network.

But AT&T does not want its intentions to be that obvious. It throws a transparent bone to regulators to offer a facade of competition in both this and the preceding recommendation.

AT&T instructs the FCC it can mimic the time-honored patina of an open, competitive industry by allowing AT&T’s competitors to sell DSL or other broadband services over AT&T facilities, but only if AT&T feels like it (at comfortable prices that don’t undercut AT&T).

5. Eliminate regulatory underbrush/superstructure that accompanies TDM-based services. For example, phase out equal access, residual ONA/CEI, record-keeping, accounting, guidebook, dialing parity, payphone, and data collection (which should be limited to that which is collected on the Commission’s Form 477) requirements.

AT&T leaving town.

What AT&T calls “underbrush,” consumers and regulators call oversight and consumer protection.

“Sayonara any telco rules, regulations and oh yes, your rights,” says Bruce Kushnick. “Your service breaks… tough. Prices go up and there’s no direct competition — too bad. Networks weren’t upgraded — so what.”

Kushnick notes this provision would allow AT&T to avoid maintaining a public record of its performance (and its potential abusive practices, bad service, and high prices), including any requirement on the state or federal level to tell the public anything about how well we are being served by the wired monopoly.

Other things on AT&T’s hit list: “Equal Access,” which opened the door to competitive long distance calling and lower rates, “Dialing Parity” which lets you avoid dialing ten (or more) digits for every call (or being forced to learn more complicated numbers for things like directory assistance or other shortened dialing numbers), and public payphones. AT&T’s desire to kill off “residual ONA” refers to the costs to establish Open Network Architecture — the framework for opening up the nation’s phone monopoly for competition. Re-establish the monopoly and there is no reason to fret about the costs to maintain access for competitors AT&T will eventually eliminate.

6. Further reform USF to provide support for broadband regardless of the regulatory classification of broadband services, eliminate any obligation to offer such services on a common carriage basis to be eligible for such support, and provide incentives for service providers to invest and offer services necessary to ensure that no one is left behind by the transition to an all-IP, broadband ecosystem.

The reform of the Universal Service Fund has already opened up opportunities for rural telecommunications companies to apply for broadband infrastructure grants to expand broadband in rural America. Only AT&T has refused to participate in the current round of broadband grants because they do not like the rules. AT&T wants a free hand to receive broadband funding, so long as it faces no questions about where the money gets spent. Under AT&T’s recommendation, the company would receive money with no obligation to ensure everyone who wants broadband in rural America can get it. It also wants the government to hand out money to providers to implement their goal of regulatory nirvana — the conversion of basic landline service to Voice over IP, idolized as the golden calf of ultimate deregulation.

But although providers won’t be left behind, consumers might be:

7. Establish/reform rules to facilitate migration of customers from legacy to IP-based services and to prevent customers that procrastinate or fail to migrate from holding up the transition. For example, establish a process for identifying a default service provider if a customer fails to migrate, and/or permit service providers to notify customers that they will be dropped from service as of a date certain if they have not migrated to an alternative service/service provider. 

This particularly arrogant provision would put a stop to Aunt Maude holding up AT&T’s grand plan to live a regulation-free lifestyle. How dare she drag her feet with AT&T’s agenda at stake? If your elderly parents or extended family don’t understand why AT&T is meddling with their landline service and don’t want to change, AT&T has an unsympathetic solution. Under their recommendation, your parents would find themselves with a “default service provider” they might not want to do business with or, even worse, simply leave them with a dead phone line AT&T has no interest in repairing. But AT&T would likely still get their way. In rural areas they already cover, AT&T would be the “default service provider” because it is the only service provider. If Maude wants her phone line back, the only way she will get it is choosing the migration to Voice over IP AT&T intended all along.

AT&T’s language is remarkably frank, but was never intended to be viewed and explained to the public at large. It was the product of a phone company lobbyist talking to a politician, staffer, or regulator that one day could become an employee of that phone company. The only way to stop this cozy relationship is to tell regulators you are watching (and understanding) the game being played here.