Remove PSTN requirement for incumbent telcos, Internet Innovation Alliance urges

Since only about 5 percent of Americans rely on POTS (plain old telephone service) and the other 95 percent use wireless, VoIP, cable and other non-regulated methods, it's incumbent upon the federal government to remove outdated regulations that require telcos to maintain traditional switched copper networks, an Internet Innovation Alliance report says.

According to the report, "Telecommunications Competition: The Infrastructure-Investment Race," authored by Anna-Maria Kovacs, current telco regulations that make maintenance of existing telco networks a priority are diverting telco investment from modern broadband networks and services.

IIA consumer voice market in 2012

(Source: IIA)

Importantly, the report emphasized, these existing networks are not particularly relevant in the modern broadband-enabled space.

"Today, consumers enjoy a dazzling array of communications choices and they are exercising them with abandon," Kovacs maintained in the report.

These choices, she wrote, are the result of competition encouraged by the Telecom Act of 1996.

"The Act helped to promote competition by freeing the cable and telephone carriers to enter into each others' markets and by leaving satellite and wireless free to do so, as well. Its most successful progeny is the Internet, which it left completely unregulated," she maintained.

Today's regulatory environment, though, fails to take into account the changes fomented by that competition and puts ILECs at a disadvantage in competing with newer unregulated players in the marketplace.

"To ensure that ILECs can continue to provide innovative solutions for consumers and compete effectively against other platforms, they must be free to make the best use of their capital. That, in turn, means dedicating their capital to IP- and fiber-based broadband networks, rather than tying it up in obsolete copper-based circuit-switched networks," she wrote.

To bolster that argument, Kovacs noted that ILECs held a 34 percent share of the consumer voice business, 14 percent share of broadband access and 10 percent share of video markets at the end of 2012.

"It is time to stop treating the ILECs as monopolies that must be hobbled and start treating them as useful assets whose health is important to this nation's economy and global competitiveness," she concluded.

For more:
- the Internet Innovation Alliance issued this report (.pdf)

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Modern myths of moving away from the old telephone network
Walking the walk on Internet regulation
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