AT&T Inc. (T:US) proposed offering digital-only telephone service in towns in Alabama and Florida as it moves toward abandoning its aging copper-wire network and escaping the U.S. regulation that goes with it.
The regional experiments will help regulators decide whether AT&T and other telephone companies will be allowed to stop offering traditional wired phone service as customers migrate to wireless and Internet-based communications.
The trials are part of the industry’s attempt to ease into a transition that sparked complaints of balky connections last year in Fire Island, New York, where Verizon Communications Inc. (VZ:US) abandoned plans to replace Hurricane Sandy-damaged copper lines with wireless service.
“Be ready, beware,” Jim Rosenthal, a seasonal Fire Island resident, said today when asked what communities need to know about the changes. “Get your ducks in order. Make the alliances. Speak loudly, make sure you’re not roadkill.”
AT&T initially will ask customers in the test areas to switch to the new technologies. In a separate phase that would require U.S. approval, the company would stop offering plain old telephone service to new customers, Hank Hultquist, AT&T vice president-federal regulatory, said today at a press briefing.
“We want to make sure our customers are comfortable with the new services,” Hultquist said. Later, the company wants to switch all customers to the newer technologies, he said.
More than 70 percent of residential customers in AT&T’s 22-state service area have abandoned traditional wired service, the company said in a filing last year asking the Federal Communications Commission to end rules preventing them from dismantling legacy systems.
The experiments are to take place in West Delray Beach, Florida, and Carbon Hill, Alabama, AT&T said in a statement. The FCC is to decide whether the trials may go ahead.
“The transition’s happening. What we’ve really got to figure out is, how do we finish it,” Hultquist said.
AT&T is developing a wireless option that will be able to carry data needed by medical devices and alarm systems, he said.
In rural Carbon Hill, which began as a coal-mining community, about 55 percent of subscribers will be offered only a wireless system, according to AT&T documents. All customers in suburban West Delray Beach trial are to be offered wired and wireless services, the company said.
AT&T chose Carbon Hill, where 21 percent of households have income below the poverty line, in part to address challenges of changing systems in a poor, rural area, the company said in a filing to the FCC today.
The company doesn’t need to file with state officials in Alabama and Florida, Hultquist said.
“We looked for places where state law wasn’t going to be an issue, where the regulatory and legal environment in the state was conducive to the transition,” Christopher Heimann, an AT&T attorney, said at the briefing.
Lightly regulated cable companies that offer combinations of voice and Internet communications have gained market share, a trend that could be blunted if phone-company competitors were freed from maintaining obsolete networks, Anna-Maria Kovacs, a visiting senior policy scholar at Georgetown University in Washington, said in an October 2013 study commissioned by the Internet Innovation Alliance, whose supporters include AT&T.
Verizon roused anger over call delays and echoes after it replaced copper lines with wireless service called Voice Link. The complaints caught the attention of New York Attorney General Eric Schneiderman, who asked state regulators to to block Voice Link expansion beyond Fire Island.
Verizon, the second-largest U.S. phone company by revenue, wanted to show it could replace old copper lines with wireless service, rather than more-expensive fiber-optic lines.
Among other things, trials will test whether callers can reach emergency services and whether people with medical devices and home security alarms can be assured they’ll always have a secure connection, FCC Chairman Tom Wheeler said in January.
The FCC said all Americans must retain access to affordable service and choices through competition. Regulators are preparing for a moment “when customers would lose a choice that that they have had for a generation” as companies stop offering plain telephone service over copper, Wheeler said in January.
AT&T, the largest U.S. phone company, wants to retire traditional networks by 2020, Chief Executive Officer Randall Stephenson told investors in September.
“It’s a big darn deal,” Stephenson said. “The amount of cost that it removes from our legacy businesses is dramatic and it’s significant.”
Supporting the old network and its “rapidly declining subscriber base” is unsustainable, Jim Cicconi, AT&T’s senior executive vice president of external and legislative affairs, said in a Jan. 30 blog post. The number of plain telephone service lines provided by AT&T dropped to 12.4 million in 2013 from 15.7 million a year earlier, Cicconi said.
AT&T will “do our very best” to provide Internet-based services in trial areas, Bob Quinn, senior vice president for federal regulatory matters, said in a 2012 blog post proposing the trials.
“For those few we cannot reach with a broadband service, whether wireline or wireless, they will still be able to keep voice service,” Quinn said. “We are very cognizant that no one should be left behind in this transition.”
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