The Federal Communications Commission (FCC) has made a timely decision to deploy a special task force to study the vast changes that have occurred across communications industries, reshaping competition and creating a vast array of new choices for consumers and businesses. This task force will make recommendations on how best to cope with the broad-ranging changes in technology.
One area of change that most of us have experienced has occurred in the telephone industry, which has undergone a transformation over the past 15 years. During this time, consumers increasingly have migrated away from purchasing voice services over the public switched telephone network (PSTN), to new modes of broadband and wireless communications, eroding the once-dominant marketplace power of incumbent local exchange carriers (ILEC). FCC regulations do not reflect this change.
From 2000 to 2011, total wireless voice connections – business and residential – have grown from one-third-to two-thirds of voice connections, while the reverse is true for wired connections. Moreover, ILEC retail switched wired lines have declined from 60 percent of connections to 19 percent with an additional 1 percent consisting of ILEC interconnected VoIP.
Based on year-end 2011 projections for residential service connections, wireless connections were 78 percent, ILEC switched lines were 13 percent, ILEC interconnected VoIP connections were 1 percent, non-ILEC switched lines were 1 percent, and non-ILEC (predominately cable) interconnected VoIP connections were 7 percent, according to an analysis by Patrick Brogan provided to the Telecommunications Research Policy Conference in September.
These data convincingly show the incumbent voice providers no longer hold a dominant position in the provision of voice service. Absent this dominant position, economic regulation of ILEC switched telephony is unnecessary and potentially harmful to business. Today’s wireline companies are looking to make investments in the 21st century infrastructure and advanced services that will drive job creative and economic growth. They should not be held back by an antiquated regulatory structure. The FCC is right to take the time to study these massive marketplace changes, and we look forward to working with the commission on this effort.