It’s time for the entire broadband ecosystem—including voice—to invest
February 25, 2013 | By Jamal Simmons
American greatness is in part based on our willingness to reach for a better future even though that often means letting go of past comforts. Not only has the United States absorbed waves of immigrants from other countries, Americans have moved from one state to another in search of better lives. We went from family farms to urban factories and now are making the exciting (and challenging) transition to a technology-based economy. Innovations in technology have meant leaving behind cherished LPs and cassette tapes for CDs and digital music; and we threw out analog televisions and rabbit ear antennae for digital TV and broadband-delivered video-on-demand.
Things change, and phone service is no different. More and more Americans are switching from the old landlines we grew up with to wireless and broadband-based telephone options. In fact, one out of three American homes now relies on wireless-only technologies, according to the U.S. National Health Interview Survey (NHIS). Telecom companies have taken note.
In addition to investing in wireless, Verizon (NYSE: VZ) committed $23 billion over nine years toward building its fiber-optic FiOS network. Similarly, AT&T (NYSE: T) recently announced plans to invest $66 billion over the next three years to transform its existing wireline network to provide high-speed Internet and video service, as it begins the transition away from antiquated 100-year-old copper lines and further expands its wireless 4G LTE service to cover 300 million people by the end of 2014.
If such efforts are successful, more ubiquitous high-speed broadband service will be available to consumers, key goals of IIA, President Barack Obama, and the FCC’s 2010 National Broadband Plan that seeks to achieve high-speed Internet coverage for 98 percent of Americans by 2015. Access to better-quality, faster-speed broadband will help Americans start new businesses and help schools transition students to blended learning models like the one at Kramer Middle School in Washington, D.C., where my brother Kwame Simmons is principal. More broadband will mean people in rural communities who are long distances from the nearest town will be able to consult with medical experts at far away hospitals without making long car trips or expensive airplane voyages.
Of course, a massive transition like this presents challenges, albeit surmountable ones. As the country migrates to all-IP networks, we must ensure every customer will still be reached by voice service regardless of where they live, including sparsely populated regions that are hard to connect. Customers with low incomes should be able to afford the improved services, and they should work with a similar degree of service quality as “plain old telephone service” during moments of great need, natural disaster or crisis. Speaking to reliability, Congressman Brian Bilbray recently said during a House Energy and Commerce hearing that during Hurricane Katrina and the fires in San Diego, “it was much more probable that when your electricity gave out that your cell phone worked enough to be able to call and say you were out of power…Those who want to talk about the old hard line technology as being dependable—it definitely was not more dependable than the new technology we had.” In its proposal to conduct beta tests, AT&T has prudently promised to test out an all-IP network on a smaller scale before transforming the entire network, allowing engineers and experts the opportunity to identify and address any potential issues that may arise early.
Many observers view this move to the future with enthusiasm. While technological advancements have granted the nation with significant benefits, many people still approach change with caution. Others will advocate for the status quo in order to retain their business models built on old technologies and favorable regulations. For example, many CLECs provide service dependent on regulated access to old Bell networks at subsidized rates. Once upon a time, regulated access may have made sense to provide a competitive alternative to the existing Bell telephone monopoly. In today’s marketplace, however, many providers compete to offer communications services. CLECs in general have failed to use their subsidized access to fund widespread investment and deployment of IP-based services, and instead have banked on the fact that they would have this favorable access in perpetuity. But for consumers, businesses and our nation as a whole to benefit from the opportunities enabled by a high-speed, all IP-based broadband network, the entire ecosystem must invest.
According to the Progressive Policy Institute, AT&T and Verizon were the two biggest investors in America out of all nonfinancial Fortune 150 companies in 2011—$20.1 billion and $16.2 billion in U.S. capital expenditures, respectively. AT&T has indicated that it plans to stay on this path and spend billions of dollars each year to aid the IP transition—more jobs and a real boost to our economy. This kind of jolt is exactly what the country needs right now.
Leaving behind an old world for a new one makes some people nervous. But taking that leap forward is what has always made America great.
Jamal Simmons, an advisor to corporate, nonprofit and political clients and former Clinton Administration appointee, is co-chairman of the Internet Innovation Alliance.