Cutting the cord of all cords

What a difference a year makes: 2009 began with Verizon Communications disputing reports that it was planning for all voice calls on its network to be VoIP-based within seven years [1]. 2010 has begun with AT&T actually asking the Federal Communications Commission [2] to set a deadline to allow the telco to shut down its landline voice network.

Is this the beginning of the end of circuit-switched landline voice services? Well, no, because the beginning of the end came long ago, when cord-cutting advanced past the urban legend stage and became a full-fledged trend. Is this a sign that telcos finally have embraced VoIP as the future of voice calling? Not really, though if the FCC complies with AT&T request and sets a landline shutdown goal and related voice transition plans, all of AT&T's future voice calls will run over IP.

AT&T's filing, more likely, is partly driven by the cost of supplying and maintaining circuit-switched voice, and partly driven by the irrelevance of landline voice (both circuit-switched and VoIP) as a service with any competitive value. And, the first part wouldn't be such a big deal if the second part weren't already true.

I used to think that VoIP service providers like Vonage and Skype would be in big trouble once the world's largest telcos embraced VoIP. Part of my logic was that attaching telco branding and reputation to VoIP immediately would convince anyone who had switched to Vonage, Skype or a cable TV VoIP plan to switch back. Another part of it had to do with the likelihood that even in a world where voice calling might eventually evolve toward a free service, bundling voice with more economically viable services would keep telcos ahead of the competition.

However, AT&T's filing may be a further indication of thoughts first expressed by telco executives last year [3]--that video and broadband are the new foundational elements of their companies, and not the voice offerings that in effect created their corporate empires. It appears to me that they are ceding the competitive voice battle to those companies that have made a big deal out of trying to steal it from them the last few years. The telcos might be ready to say, "You want the landline voice business? Okay, have at it. It's costing us too much to keep fighting for it anyway."

The telcos will take the VoIP customers they can get with their own service bundles, but I bet they won't spend too much time or money marketing VoIP in the years ahead. Meanwhile, given the opportunity by FCC action, they will funnel more investment and human resources into broadband and video, and probably more aggressively than they would without the FCC's blessing (Dropping circuit-switched voice altogether and cutting some jobs associated with that network while reassigning many others no doubt would lead to a labor uproar-less so if it's by order of federal regulators).

As the stock market continues to battle back toward boom-time levels, the telcos also might notice that the timing is very good to eliminate the part of their business that Wall Street continues to view as their ball and chain. Appealing to the FCC to relieve them of their landline voice responsibility will spare them their ongoing death by degrees.

Finally, telcos (and specifically AT&T in this case) probably have realized that it's time to accelerate the migration of their own landline voice customers to their own mobile services. That was happening to some degree already, but mobile competition is running hotter than ever, and telcos want everyone a-shore that's going a-shore.

Last year at this time, Verizon's main beef about reports on its possible voice plans had to do with the pretty specific timetable that was mentioned in those reports. But, even then, Verizon knew where the future was headed, and now AT&T is the first to act on it. However, the leadership at AT&T and other telcos still may be hesitant to be seen as the generation that pried landline voice connections away from the handful of consumers who actually care about them, as well as the workforces that keep those connections running. That's where the broadband-minded FCC can help them take the next step.

-Dan [4]