And the night was alive With a thousand voices Fighting to be heard And each and every one of them Connected to me. - Maury Yeaston, “The Night Was Alive” Titanic: The Musical
America’s land line telephone business faces grave trouble. Consider the following:
- According to the Federal Communications Commission (FCC), the number of traditional land line telephones in the United States has declined every year since 2001. After reaching a high of about 192 million in 2001, the FCC reports, the number of telephones has fallen to 175 million (about 8 percent) despite significant population and economic growth. On a per-capita basis, the United States has seen the number of conventional land lines decline by about 13 percent. Even by the most optimistic estimates, the growth of Voice over Internet Protocol (VoIP) telephone service has made up less than 20 percent of the loss. The growth of mobile phones, however, has increased the total number of telephones far faster than population growth.
- In July, SunRocket, the second largest pure-play VoIP telephone company announced that it was shutting down operations, leaving its 200,000 customers without any telephone service. A small company bought its assets for pennies on the dollar.
- As it rolled out its FIOS fiber-optic service, Verizon began removing the copper cable that has carried telephone calls for most of the past 100 years. Although the company offers a number of plausible justifications for doing so and appears willing to replace the copper when asked, it’s unlikely that Verizon would be removing copper if it believed the land line business had much of a future.
- Verizon has also sold its traditional land line telephone businesses in both New England and Hawaii. AT&T, likewise, has sold much of its land line business across the country.
- Ooma, a start-up company, promises that it will allow customers to “own the dial tone” and let them make calls anywhere in the United States at no additional charge, forever, with no recurring service fee, once they purchase a $399 device. If Ooma’s technology, which the author has not experienced firsthand, works as advertised, it would threaten to undermine the traditional telephone companies’ business model. This technology, which might be called “Device-Based Telephony,” offers another alternative to traditional land line service that, if successful, would make it very difficult for any company that charges monthly fees to compete.
In short, the land line telephone business faces very serious problems across the board. This paper strives to convey two messages. First, traditional land line telephone service transmitted over copper and coaxial cable—the traditional Public Switched Telephone Network (PSTN)—faces serious peril and could well disappear in the medium- to long-term, at least for residential use. Second, if we wish to maintain universal land line telephone service in the United States, we must leave new voice telecom technologies—VoIP and Device-Based Telephony—as lightly regulated as possible.