Tag Archives: carrier of last resort

AT&T to Retire Copper

AT&T has made it official that it plans to shut down copper networks everywhere except California by the end of 2029. This is not exactly news since the company has been quietly shutting down copper all over the country.

California is a special situation because the California Public Service Commission has never deregulated AT&T as a local telephone company and the state is going to make AT&T prove to it that customers will not be stranded when the copper comes down. Even California regulations have not stopped AT&T from quietly killing copper in California, as described in this blog I wrote early in 2024.

AT&T says it will offer an alternate technology to customers – either fiber or wireless. AT&T announced in early December that it plans to build fiber to 45 million additional passings by the end of 2029. That will certainly cover a lot of remaining DSL neighborhoods in cities and towns. But I have to wonder if AT&T is really planning on building fiber everywhere in cities. The concept of building ubiquitous fiber is counter to its historical construction plans of only building fiber in neighborhoods with the lowest cost per passing.

Consider my City of Asheville, NC. AT&T currently claims to have built fiber to pass 17,500 of 32,600 passings in the city. Is AT&T really going to build fiber to everybody else in order to replace DSL? If AT&T has already built fiber in the lowest-cost neighborhoods, it will cost a lot more per passing to cover the rest. 45 million passings is a huge number, and while it’s possible the company could build to this entire city, it would be a lot easier to build to neighborhoods with the best demographics and quietly disconnect copper DSL in the rest.

Replacing copper in rural areas is a much bigger challenge. AT&T says it will replace rural copper with FWA wireless technology – but that implies having rural towers in place that will reach everybody. FWA technology only covers roughly a two-mile circle around a tower, and in most counties, AT&T towers covers maybe a quarter of the geographic footprint. The company has no financial incentive to add new cell towers in sparely populated rural areas.

AT&T can’t tell the truth and say it will offer an alternative for only a portion of rural customers, but that’s the reality. AT&T can’t bring cellular broadband to places where cellphones barely work. The company is not about to say that it will offer an alternative for only some portion of copper customers, but that is what will ultimately happen.

I can’t imagine AT&T building in high-cost urban neighborhoods or sparely populated areas where construction makes no financial sense. Wall Street would crucify AT&T if it tried to bring a DSL replacement to everybody in the historical monopoly footprint. Even worse, doing so might entice regulators to treat AT&T like a monopoly again and make them really be the carrier of last resort.

One interesting part of the announcement is that the company says it has a new technology that will allow people to keep their old analog devices that worked on copper networks – things like medical monitors and burglar alarms. Telcos that upgrade copper technology face public grief over people who want to keep their old devices running. The technology AT&T is offering is not new and has been around for decades. The device is a emulation device that can create a TDM  bridge from an ethernet connection. Telcos have been offering this technology for decades to businesses that wanted to maintain old PBX and keysystem telephones. What’s new is that AT&T has condensed the technology to a small box that can be set next to a home router.

Carrier of Last Resort is Still a Thing

I always find it interesting when old regulations bubble up into the news. As reported by Jon Brodkin in Ars Technica, an administrative law judge at the California Public Utilities Commission (CPUC) rejected a petition by AT&T to walk away from its carrier of last resort obligations for voice service.

For those unfamiliar with carrier of last resort, this was a regulatory principle that harkens back to 14th-century English law, where businesses were granted the ability to operate as long as they agreed to serve everybody. In this country, carrier of last resort was embedded into the rules when states started giving monopoly service areas to telephone companies. Carrier of last resort rules required telephone companies to build to reach every home that could be reasonably reached. While the cost to reach remote customers might be high, the quid pro quo is that carriers were allowed to achieve a guaranteed rate of return on investments they made.

In the petition in California, AT&T requested to be relieved of carrier of last resort obligations, which would give it the ability to stop providing telephone service in rural areas. The AT&T petition was met with a lot of protests from rural residents asking the CPUC to not let AT&T kill their telephone service.

The Administrative law judge rejected the AT&T petition. He ruled that he was unable to ignore the existing California rules that require carrier of last resort. He also ruled against the AT&T claim that California rules would require AT&T to keep copper. He noted that there is nothing in the California rules that would stop AT&T from decommissioning copper wires.

The ruling went on to point out that there are many examples where AT&T is replacing copper with fiber technology. The ruling notes that there is nothing in the California rules that would stop AT&T from replacing copper with fiber, wireless, or other technologies. The bottom line is that the ruling says that A&T is allowed to kill copper networks, but that carrier of last resort obligations require the company to provide an alternative technology that can bring voice service to households.

There are a lot of stories in the last few years of AT&T disconnecting working rural telephone lines without providing a technical alternative. The company has done this quietly in many parts of the country, and I’ve run across rural AT&T areas where there is no longer any working DSL.

This ruling can be made in California because the CPUC never dropped the carrier of last resort rules. In many states AT&T and other large telcos were able to eliminate these rules as part of the process of deregulating telephone rates. In most states, the decision to deregulate telephone rates involved telcos being able to walk away from a lot of regulatory rules for a promise to freeze residential telephone rates.

Unfortunately, one area of regulation that went out the door in this process was the obligation of  telcos to meet performance standards and to perform needed maintenance. Big telcos reacted to deregulation by cutting rural technicians and rural maintenance budgets to the point where maintenance meant only doing band-aids repair for customers who yelled the loudest.

To some degree, this ruling is too little, too late. It’s harder each year to keep copper networks limping along, and AT&T can probably still meet carrier of last resort obligations by keeping telephones just barely working. It’s likely that most of the areas covered by this ruling will be eligible for BEAD grants, so the issue probably will quietly die within five years as other carriers displace AT&T and other telcos who want to walk away from rural markets.

For me, this ruling is somewhat nostalgic. There were a lot of states fighting this battle a decade or two ago, and now only a few states are trying to keep the phones working in rural areas. We have to be nearing a time when there will be no more talk about carrier of last resort. Grant programs like BEAD require a grant winner to build to every home in a grant area – but they don’t require carrier of last resort obligations to build to new homes after the grant construction is completed. We’ll probably never stop hearing about rural residents who are quoted astronomical sums to bring a landline or broadband connection to their home.

The End of Rural Landlines?

Recent coverage by CBS News on Channel 13 in Sacramento, California documented how AT&T had cut off landline telephone from 80-year-old Patricia Pereira in Camp Seco. She called at the beginning of 2023 to ask if landline service could be transferred from a neighboring home to hers. Instead of transferring the service, AT&T cut the copper lines dead on both properties. She tried a cellphone, but she lives in a dead zone and barely receives cellular signals. She is now cut off from 911 and other essential services.

AT&T told CBS13 that “Our application seeks approval from the CPUC to remove outdated regulations in California and to help the limited remaining landline consumers transition to modern, alternative services to replace their current outdated ones. All AT&T California customers will continue to receive their traditional landline services until an alternative service becomes available by AT&T or another provider.”

That’s obviously not true since many rural customers are in the same position as Pereira, where cellular service doesn’t work well, or at all, in many rural places in the country. In this case, the company cut off Pereira long before the company applied to cut copper dead in her area.

This is happening in rural AT&T areas across the country. AT&T is walking away from rural copper facilities that provide landline telephone and DSL broadband.

I’m sure that the rural AT&T copper networks are old and in poor condition. It has been inevitable that copper technology will eventually come to an end. But that’s not the whole story. Copper networks maintained by smaller independent telephone companies are still in workable condition because these companies have been doing the needed maintenance over the years. AT&T stopped doing routine maintenance on rural networks decades ago, and the company’s neglect has accelerated the death of the copper networks.

State regulatory commissions have not been doing their job. AT&T and other telephone companies have been operating under regulations that include the concept of carrier-of-last-resort, which means that the telephone companies are obligated to provide customers with voice service. It sounds like a noble sentiment that AT&T wants to make sure that customers have an alternate service before killing copper – which would be cellular coverage in rural areas. However, the company’s treatment of Pereira shows that is just a statement for public consumption and not the truth.

If the California Public Service Commission was enforcing the carrier-of-last-resort rules, it would make sure that customers have cell coverage at home before allowing AT&T to walk away from the copper. If that means AT&T would have to build new cell towers, so be it.

One of the oddest things about the TV coverage is that the newscaster ended the segment by parroting AT&T’s position by saying, “All AT&T California customers will continue to receive their traditional landline service until an alternate service is available by AT&T or another provider.” This was said after a segment that shows that AT&T is already walking away from a customer, and without first getting permission from the CPUC.

Is Carrier of Last Resort Dead?

The concept of common carrier stretches back to the 14th century in English law, where businesses were granted the exclusive right to be in business as long as they were willing to serve everybody. The term common carrier came into use to describe the obligation of businesses like coaches, ferries, etc. that were required to serve anybody who asked to be transported. The concept was carried over to businesses that were given a franchise to serve a local area, and businesses like blacksmiths and innkeepers were required to serve anybody who wanted service. This concept still applies to businesses today, like railroads, which are not allowed to selectively refuse to carry freight.

Carrier of last resort (COLR) is a version of common carriage that has been applied to businesses that operate large networks like telephone companies, electric companies, water companies, and gas companies. Federal or State rules have always required such businesses to serve anybody inside of the franchise area who requests service.

In exchange for being granted a franchise area, COLR for telephone companies has always come with specific obligations. A COLR is expected to serve everybody in the franchise area, even if that means extending facilities. A COLR needs regulatory approval to withdraw from serving customers. A COLR is expected to operate the business with care, skill, and honesty and to charge fair and reasonable prices.

The concept of carrier of last resort for telephone companies started to weaken with the passage of the Telecommunications Act of 1996. This Act allowed for local telephone competition, and some legislators or regulators granted relief for telephone companies from some of the carrier of last resort obligations. For example, some states have eliminated COLR obligations as part of deregulation. Some regulators have eliminated most COLR obligations for specific telephone companies for the same reason. But even in most cases where the COLR obligations have been weakened, regulators still usually require a telco to ask for permission to withdraw from a market.

While some COLR obligations were weakened, others were expanded. For example, some states have required CLECs (competitive telephone companies) to accept COLR obligations in exchange for participating in subsidy programs. Cities have often only agreed to give a franchise agreement to CLEC or ISP that agrees to serve everybody. In many cases, this obligation is no longer explicitly called COLR, but uses terms like “duty to serve” or “obligation to serve” but refers to obligations similar to COLR.

The COLR issue has come to the forefront for broadband because of broadband grants and subsidies. Some state and local broadband grants have included an obligation to serve everybody in a grant area. The largest subsidy program to require 100% coverage is the Rural Digital Opportunity Fund (RDOF). ISPs that accept this funding are expected to offer service to 100% of homes and businesses in the covered Census blocks by the end of the six-year deployment period. It’s not entirely clear if the upcoming BEAD grants will require 100% coverage, and that final determination will likely be included in each State’s final grant rules.

Is the agreement to serve customers that is obligated through a grant or subsidy program the same as a carrier of last resort obligation? I expect not. For example, will an RDOF winner be expected in the future to extend the network to newly constructed homes?

There are clearly going to be households in RDOF areas that are not offered service. For example, many of the RDOF winners use fixed wireless technology, and there are always homes in any area that can’t be reached with the technology for some reason. In hilly and heavily wooded areas, this might be a large percentage of households.

Does a home that is not covered by RDOF have a reasonable remedy to get service? In the past, a customer could complain to State regulators if a telco was refusing to serve them. It’s hard to imagine an individual homeowner opening an expensive and complicated FCC proceeding to complain about being missed by RFOF.

Technology is also creating havoc in rural areas for traditional telephone company obligations. When I was recently upgrading my cellphone in an AT&T store, I overheard the AT&T representative tell a customer that they would soon be losing their telephone copper and would be moved to FWA cellular wireless.  My county is extremely hilly and wooded, and there is a major lack of rural cell towers. There is a good chance that this customer is not within reach of the offered cellular broadband. It sounds like the end of carrier of last resort obligations if a telco can cut the copper wires and move customers to a cellular service that doesn’t work at their home.

In circling back to the question asked at the beginning of this blog, are there many places left where a regulator will step in and demand that an ISP built infrastructure to reach an unserved household? I think the chances of that happening are getting increasingly remote.

Old Regulation Rears its Head

The way that we regulate telecom services is interesting. The FCC has effectively eliminated federal regulation of broadband, the service that over 90% of households now use. Meanwhile, landline telephone service, the telecom product that is used by an ever-decreasing number of homes is still heavily regulated.

The target of much of the remaining regulation are the big telephone companies that still operate large copper networks. It’s easy to bash the big telephone companies because of the poor quality of services offered on those copper networks, and I’ve done so many times in this blog.

When you stop and think about it, those companies are still using copper networks built in the 50s, 60s, and 70s. If the telcos had been good stewards of those networks and maintained them meticulously those networks would still be 50 to 70 years old, and older than the 35-40 year expected life for the networks. The big telcos largely ignored maintenance of copper for the last 30 years or more, and frankly, it’s a miracle that the old copper networks are still working.

Perhaps the oddest aspect of telephone regulation is that a regulatory body will occasionally punish a big telco for still being in the copper business. A good example is a proceeding in New Mexico last fall where CenturyLink asked to be deregulated for landline telephone services. This doesn’t mean that they would stop offering the services, but rather that many of the old regulations put in place at the heyday of the telephone monopolies would be excused. Most states have deregulated the big telcos from a lot of the old telephone rules.

The New Mexico Public Regulations Commission (NMPRC) rejected the request and said that CenturyLink had not demonstrated that there was ‘effective competition’ for residential telephone service. It’s hard to find any way to defend that decision. First, in many states, there are now more residential telephone customers using cable company telephone services than the old telephone company copper. Interestingly, cable companies face almost no regulation in providing telephone service and any cable company in New Mexico does not live under the same rules that CenturyLink must follow.

Further, the latest surveys I’ve seen show that 96% of US adults now have a cell phone. It’s hard to say with a straight face that cellular service is not a direct competitor to landline telephone service. Considering the big recent stir at the FCC where cellular 4G coverage maps were shown to be largely fictional, perhaps a lot of rural New Mexico doesn’t have cellular coverage – and perhaps that’s what drove the Commission’s decision. It’s worth noting  that cellular companies are also not as heavily regulated as landline telephone providers.

The regulation that is most relevant in this case is the obligation to be the carrier of last resort. The telcos like CenturyLink are still expected, within some regulatory exceptions, to provide service to anybody who asks for service. That obligation doesn’t extend to the cable companies, to the cellular companies, or even to rural broadband – just to telephone service.

I have no doubt that there are rural homes in the state for which CenturyLink is the only communications link to the world. In areas where there is no cellular service and where the cable companies refuse to build networks, there are rural homes that rely on CenturyLink and other telcos to keep them connected. The regulatory question that must be asked is if such homes are sufficient reason to still strongly regulate telephone service in a state. Hopefully, the number of homes without cellular service will decrease significantly when the FCC awards the $9 billion in the 5G Fund program to extend cellular service to more remote communities.

It’s not an easy question to answer. We know CenturyLink could have done a better job of taking care of their copper. In this country, the smaller independent telephone companies did the needed maintenance to keep copper in the best shape possible. We saw the same thing in Germany where the copper networks were built at the same time as US copper, but which have been maintained better.

But in this country, most of the smaller telcos have already replaced, or have plans to replace the old copper with fiber. In Germany, there are vigorous public debates on the topic, with engineers saying that the copper networks are not likely to last more than another decade. Where copper remains the Germans have invested in the fastest DSL possible – something the big telcos here inexplicably have not done.

To some degree the decision in New Mexico is meaningless. No regulatory decision can make the old copper perform better or last longer, so there are not many practical ramifications of the Commission’s decision. CenturyLink didn’t even own these networks for most of the years when the maintenance wasn’t done – although they have likely cut back further on maintenance in recent years, as have the other big telcos.

I’m not highlighting New Mexico for this issue because many other states have made similar regulatory decisions. Regulators are rightfully mad at the big telcos for neglecting copper, and even madder that there are no plans to upgrade the copper to something better. But the time for regulators to do something about this was twenty and thirty years ago. The copper wires in New Mexico are going to die, and at some future date the networks will go dark. The regulators can choose to regulate copper down to the last day of the last customer – but to a large degree, the remaining regulations don’t mean a whole lot.

Should Rural Fiber be a Utility?

I’ve heard or read half a dozen people in the last month say that the way we get rural fiber everywhere is to make fiber a regulated utility. This idea certainly has appeal for the many rural places that don’t have fiber today. On the surface this sounds like a way to possibly get fiber everywhere, and it’s hard to see a downside to that.

However, I can think of a number of hurdles and roadblocks to this concept that might be hard to overcome. This blog is too short to properly explore most of these ideas and it would require a 40-page whitepaper to give this topic justice. With that caveat, here are some of the big issues to be solved if we wanted to create rural fiber utilities.

What About Existing Fiber? What would we do about all of those who have already built rural fiber? There are small telcos, cooperatives, and rural communities that have already acted and found a way to fund a rural fiber network. Would we force someone who has already taken the commercial risk to somehow convert those existing fiber properties into a utility? Most small companies that have built rural fiber took on a huge debt burden to do so. Rural communities that have built fiber likely put tax revenues on the line to do so. It seems unfair to somehow force those with vision to already tackle this to somehow transform into a regulated utility.

What About Choice? One of the most important goals of almost every community I have worked with is to have broadband choice. One of the key aspects of a fiber utility is that it will almost certainly be a monopoly. Are we going to kick out WISPs in favor of a fiber utility? Would a fiber monopoly be able to block satellite broadband? .

The Definition of Rural. What areas are eligible to be part of a regulated fiber utility? If the definition is defined by customer density, then we could end up with farms with fiber and county seats without fiber. There’s also the more global consideration that most urban areas don’t have fiber today. Do we ask cities that don’t have fiber to help subsidize rural broadband? It’s impractical to think that you could force city networks to become a utility because that would financially confiscate networks from the big cable companies.

Who Pays for It? Building fiber in rural America would probably require low-interest loans from the government for the initial construction – we did this before when we built rural electric grids, so this can be made to work. But what about keeping fiber utilities solvent for the long run? The rural telephone network functioned so well because revenues from urban customers were used to subsidize service in rural places. When the big telcos were deregulated the first thing they did was to stop the internal subsidies. Who would pay to keep fiber networks running in rural America? Would urban ISPs have to help pay for rural broadband? Alternatively, might this require a tax on urban broadband customers to subsidize rural broadband customers?

Who Operates It?  This might be the stickiest question of all. Do we hand utility authority to local government, even those who are reluctant to take on the responsibility? Would people favor a fiber utility if the government handed over the operations to AT&T, Verizon, CenturyLink or Frontier? What do we do about cooperatives where the customers want to own their fiber network? Do we force existing fiber owners to somehow sell or give their networks to a new utility?

What About Carrier of Last Resort? One of the premises of being a utility is the idea that everybody in the monopoly service area can get service. Would we force fiber utilities to serve everybody? What about a customer who is so remote that it takes hundreds of thousands of dollars of construction to reach them? Who gets to decide who gets service? Does a fiber utility have to build to reach every new home?

What About Innovation? Technology never sits still. How do force fiber utilities to upgrade over time to stay current and relevant? Upgrading infrastructure is an expensive problem for existing utilities – as I found out recently when a water problem uncovered the fact that my local water utility still has some of the original main feeder pipes built out of wood. The common wisdom is that fiber will last a long time – but who pays to replace it eventually like we are now doing with the wooden water pipes? And what about electronics upgrades that happen far more often?

Government’s Role. None of this can be done without strong rules set by and enforced by the government. For example, the long-term funding mechanisms can only be created by the government. This almost certainly would require a new telecom act from Congress. Considering how lobbyists can sideline almost any legislative effort, is it even possible to create fiber utility that would work? Fiber utilities would also require a strong FCC that agrees to take back and strongly regulate and enforce broadband regulations.

Summary. I’ve only described a partial list of the hurdles faced in creating rural fiber utilities. There is no issue on this list that can’t be solved – but collectively they create huge hurdles. My biggest fear is that politics and lobbying would intervene, and we’d do it poorly. I suspect that similar hurdles faced those who created the rural electric and telephone companies – and they found a way to get it done. But done poorly, fiber utilities could be a disaster.

Rural America Deserved Better

I’ve often contended that the large telcos have made their money back several times over in rural America and could have comfortably rolled those profits back into rural networks. If they had done so then by now most of rural America would have at least 25/3 Mbps DSL and an upgrade to rural fiber would be underway.

Since the big telcos haven’t modernized rural networks for decades we are now faced with making the leap from poorly maintained copper straight to fiber. Sadly, the big telcos could have copied what smaller telcos have done – continually build a little fiber each year deeper into the rural areas to reduce the length of the copper loops. I’ve watched small telco clients over the last twenty years that have upgraded rural DSL from 1 Mbps to 6 Mbps to 15 Mbps and then to 25 Mbps or faster.

Instead, the big telcos built DSL in county seats and some other small towns in their service areas. Where the small telcos might have upgraded electronics three or four times since the late 1990s, the big telcos have likely upgraded the DSL in towns once, and perhaps in some lucky towns twice. This is why it’s still easy to go to rural towns all over the US and find maximum DSL speeds of 6 Mbps or 12 Mbps. The DSL electronics in many of these towns are now over ten or fifteen years old. The big telcos also rarely extended DSL outside of the town hubs. Customers that lived within a few miles of town were given DSL of perhaps 1 Mbps or 2 Mbps and customers further out were offered DSL that is often barely faster than dial-up.

This was all a deliberate decision. Upper management of the big telcos decided before 2000 that they weren’t going to extend DSL into the rural areas surrounding towns and they’ve made zero effort to do so since then. The big telcos failed their rural customers when they walked away from upgrading the copper and regulators mostly let them get away with it. The telcos had collected telephone revenues from the rural areas for decades before 2000. The telcos were all still regulated in 2000 and were all still considered as the carrier of last resort for telephone service. I think the FCC and state regulators screwed up when they didn’t also make them the carrier of last resort for broadband.

Some states tried to force the telcos to provide rural broadband. Pennsylvania is a famous example of bad behavior by the big telcos. In 1993 Bell Atlantic promised state regulators that they would bring universal broadband to cover over two million rural homes in the state. The state rewarded the telco by allowing a major rate increase, supposedly to help pay for the upgrades. It’s now 26 years later and the company that renamed itself as Verizon never made any of the promised upgrades. The rural valleys of central and western Pennsylvania have some of the worse rural broadband in America due to this broken promise.

The sad thing is that states like Pennsylvania had to try to bribe the telco to do the right thing. As regulated telcos, the companies should have routinely spent annual capital to improve the rural networks, a little each year. They were collecting the revenues to make it happen. What I find shortsighted about this decision by the telcos is that, if they had upgraded to decent rural broadband they likely would enjoy 80%+ broadband penetration rates in rural areas – all with zero competition. The telcos passed on the opportunity to make a lot of money.

It’s a lot harder today to make a business case to leap from copper to fiber – mostly because little rural fiber has already been built in many counties. If the big telcos had built fiber deep into the last mile, then the upgrade to fiber could have been gradually introduced over time. Instead, the big telcos simply all decided that they were quietly going to walk away from rural America without making any announcement they were doing so. For years they have talked about their commitment to rural America. They are putting out press releases even today patting themselves on the back for the CAF II upgrades – which was funded by the FCC but which should all have been funded over past decades using the revenues collected from rural customers.

If the big telcos had done what they were supposed to have done as regulated carriers, then the CAF II subsidies could have been used to aid them in upgrading to fiber in the last mile. We know this could work because most small rural telcos are making upgrades to fiber from the ACAM funds, which is equivalent to the CAF II funds, but for smaller telcos.

I lay a lot of blame on the regulators. Everybody in the industry understood what the big telcos were doing (and not doing). Regulators could have been a lot tougher and threatened to yank the big telco franchises in rural America. In the perfect world, regulators would have handed the rural service areas of the big telcos to somebody else twenty years ago when it was clear the telcos had all but abandoned the properties.

Telco regulation helped to build the copper networks that reach to rural homes and regulation should have been used to expand broadband. The sad part of all of this is that, if the telcos had done the right thing, then millions of homes in rural America would have decent broadband today, provided by the telcos, and the telcos would be benefitting from the revenues from those customers. Rural America deserved better.

Verizon to Retire Copper

Verizon is asking the FCC for permission to retire copper networks throughout its service territory in New York, Massachusetts, Maryland, Virginia, Rhode Island and Pennsylvania. In recent months the company has asked to kill copper in hundreds of exchanges in those states. These range from urban exchanges in New York City to exchanges scattered all over the outer suburbs of Washington DC and Baltimore. Some of these filings can be found at this site.

The filings ask to retire the copper wires. Verizon will no longer support copper in these exchanges and will stop doing any maintenance on copper. The company intends to move people who still are served by copper over to fiber and is not waiting for the FCC notice period to make such conversions. Verizon is also retiring the older DMS telephone switches, purchased years ago from the long-defunct Northern Telecom. Telephone service will be moved to more modern softs switches that Verizon uses for fiber customers.

The FCC process requires Verizon to notify the public about plans to retire copper and if no objections are filed in a given exchange the retirement takes place 90 days after the FCC’s release of the public notice to retire. Verizon has been announcing copper retirements since February 2017 and was forced to respond to intervention in some locations, but eventually refiled most retirement notices a second time.

Interestingly, much of the FiOS fiber network was built by overlashing fiber onto the copper wires, so the copper wires on poles are likely to remain in place for a long time to come.

From a technical perspective, these changes were inevitable. Verizon is the only big telco to widely build fiber plan in residential neighborhoods and it makes no sense to ask them to maintain two technologies in neighborhoods with fiber.

I have to wonder what took them so long to get around to retiring the copper. Perhaps we have that answer in language that is in each FCC request where Verizon says it “has deployed or plans to deploy fiber-to-the-premises in these areas”. When Verizon first deployed FiOS they deployed it in a helter-skelter manner, mostly sticking to neighborhoods which had the lowest deployment cost, usually where they could overlash on aerial copper. At the time they bypassed places where other utilities were buried unless the neighborhood already had empty conduit in place. Perhaps Verizon has quietly added fiber to fill in these gaps or is now prepared to finally do so.

That is the one area of concern raised by these notices. What happens to customers who still only have a copper alternative? If they have a maintenance issue will Verizon refuse to fix it? While Verizon says they are prepared to deploy fiber everywhere, what happens to customers until the fiber is in front of their home or business? What happens to their telephone service if their voice switch is suddenly turned off?

I have to hope that Verizon has considered these situations and that they won’t let customers go dead. While many of the affected exchanges are mostly urban, many of them include rural areas that are not covered by a cable company competitor, so if customers lose Verizon service, they could find themselves with no communications alternative. Is Verizon really going to build FiOS fiber in all of the rural areas around the cities they serve?

AT&T is also working towards eliminating copper and offers fixed cellular as the alternative to copper in rural places. Is that being considered by Verizon but not mentioned in these filings?

I also wonder what happens to new customers. Will Verizon build a fiber drop to a customer who only wants to buy a single telephone line? Will Verizon build fiber to new houses, particularly those in rural areas? In many states the level of telephone regulation has been reduced or eliminated and I have to wonder if Verizon still sees themselves as the carrier of last resort that is required to provide telephone service upon request.

Verizon probably has an answer to all of these questions, but the FCC request to retire copper doesn’t force the company to get specific. All of the questions I’ve asked wouldn’t exist if Verizon built fiber everywhere in an exchange before exiting the copper business. As somebody who has seen the big telcos fail to meet promises many times, I’d be nervous if I was a Verizon customer still served by copper and had to rely on Verizon’s assurance that they have ‘plans’ to bring fiber.

Windstream Turns Focus to Wireless

Windstream CEO Tony Thomas recently told investors that the company plans to stress wireless technology over copper going into the future. The company has been using point-to-point wireless to serve large businesses for several years. The company has more recently been using fixed point-to-multipoint wireless technology to satisfy some of it’s CAF II build-out requirements.

Thomas says that the fixed wireless technology blows away what could be provided over the old copper plant with DSL. In places with flat and open terrain like Iowa and Nebraska the company is seeing rural residential broadband speeds as fast as 100 Mbps with wireless – far faster than can be obtained with DSL.

Thomas also said that the company is also interested in fixed 5G deployments, similar to what Verizon is now starting to deploy – putting 5G transmitters on poles to serve nearby homes. He says the company is interested in the technology in places where they are ‘fiber rich’. While Windstream serves a lot of extremely rural locations, there also serve a significant number of towns and small cities in their incumbent service areas that might be good candidates for 5G.

The emphasis on wireless deployments puts Windstream on the same trajectory as AT&T. AT&T has made it clear numerous times to the FCC that they company would like to tear down rural copper wherever it can to serve customers with wireless. AT&T’s approach differs in that AT&T will be using its licensed cellular spectrum and 4G LTE in rural markets while Windstream would use unlicensed spectrum like various WISPs.

This leads me to wonder if Windstream will join the list of big telcos that will largely ignore its existing copper plant moving into the future. Verizon has done it’s best to sell rural copper to Frontier and seems to be largely ignoring its remaining copper plant – it’s the only big telcos that didn’t even bother to chase the CAF II money that could have been used to upgrade rural copper.

The new CenturyLink CEO made it clear that the company has no desire to make any additional investments that will earn ‘infrastructure returns’, meaning investing in last mile networks, both copper and fiber. You can’t say that Frontier doesn’t want to continue to support copper, but the company is clearly cash-stressed and is widely reported to be ignoring needed upgrades and repairs to rural copper networks.

The transition from copper to wireless is always scary for a rural area. It’s great that Windstream can now deliver speeds up to 100 Mbps to some customers. However, the reality of wireless networks are that there are always some customers who are out of reach of the transmitters. These customers may have physical impediments such as being in a valley or behind a hill and out of line-of-sight from towers. Or customers might just live to far away from a tower since all of the wireless technologies only work for some fixed distance from a tower, depending upon the specific spectrum being used.

It makes no sense for a rural telco to operate two networks, and one has to wonder what happens to the customers that can’t get the wireless service when the day comes when the copper network gets torn down. This has certainly been one of the concerns at the FCC when considering AT&T’s requests to tear down copper. The current FCC has relaxed the hurdles needed to tear down copper and so this situation is bound to arise. In the past the telcos had carrier of last-resort obligations for anybody living in the service area. Will they be required to somehow get wireless signal to those customers that fall between the cracks? I doubt that anybody will force them to do so. It’s not far-fetched to imagine customers living within a regulated telcos service area who can’t get telephone or broadband service from the telco.

Customers in these areas also have to be concerned with the future. We have wide experience that the current wireless technologies don’t last very long. We’ve seen electronics wear out and become functionally obsolete within seven years. Will Windstream and the other telcos chasing the wireless technology path dedicate enough capital to constantly replace electronics? We’ll have to wait for that answer – but experience says that they will cut corners to save money.

I also have to wonder what happens to the many parts of the Windstream service areas that are too hilly or too wooded for the wireless technology. As the company becomes wireless-oriented will they ignore the parts of the company stuck with copper? I just recently visited some rural counties that are heavily wooded, and which were told by local Windstream staff that the upgrades they’ve already seen on copper (which did not seem to make much difference) were the last upgrades they might ever see. If Windstream joins the other list of big telcos that will ignore rural copper, then these networks will die a natural death from neglect. The copper networks of all of the big telcos are already old and it won’t take much neglect to push these networks into the final death spiral.

Carrier of Last Resort

Every once in a while I see a regulatory requirement that makes me scratch my head. One of the requirements of the current CAF II reverse auction is that every winner must become an Eligible Telecommunications Carrier (ETC) before receiving the funding – and I wonder why this is needed? This requirement is coupled with another puzzling requirement that anybody taking this funding must provide telephone service in addition to broadband. Since the purpose of the CAF II program is to expand rural broadband these requirements seem incongruous with the purpose of the program.

The ETC regulatory status was created by the Telecommunications Act of 1996. Congress created this new class of carriers to mean any carrier that is willing to provide basic services within a specified geographic area (and in 1996 this was specified as providing voice service) and for that willingness to serve would be eligible to receive any available subsidies.

While this is not in writing anywhere, I’m guessing that these requirements are part of the ongoing plan to erode the rural carrier of last resort obligation (COLR) for the big telcos. Carrier of last resort is a regulatory concept that is applied by regulators to utility infrastructure providers including telco incumbents, electric, gas and water providers. The textbook definition of carrier of last resort is a utility provider that is required by law to serve customers within a defined service area, even if serving that customer is not economically viable. Further a COLR is required to charge just and reasonable prices and generally has legal hurdles that make it difficult to withdraw from serving within the defined service area.

We are seeing rural carrier of last resort obligations eroding all over the place. For example, the FCC is proposing rules that will allow copper providers to tear down copper networks with no obligation to replace them with some alternate technology.

I think this requirement in the CAF II reverse auction is along the same vein. All of the areas covered by this auction are within the historic regulated footprint of one of the large telcos. Except for the Verizon service areas, where Verizon did not accept the original CAF II funding, these are the most remote customers in this auction are in very rural areas. These are the customers at the far end of long copper lines who have no broadband, and likely no quality telephone service.

Anybody accepting the CAF II reverse funding must file for ETC status for those census blocks where they are getting funding. This is a requirement even if the auction winner is only going to be serving one or two people within that census block. Census blocks are areas that generally include 600 – 800 homes. In cities a census block might be as small as a block or two, but in rural areas a census block can be large.

My bet is that the large telcos are going to claim that they no longer have carrier of last resort in any rural area where there is now a second ETC. They will ask regulators why they need to serve a new home built in one of these areas if there is another carrier with similar obligations. If that’s the case, then this reverse auction is going to remove huge chunks of rural America from having a carrier of last resort provider. It’s likely that incumbent telcos will use the existence of a second ETC to avoid having to bring service to new homes.

I have an even more nagging worry. ETC status is something that is granted by state regulatory commissions. In granting this status it’s possible that some states are going to interpret this to mean that a new ETC might have some carrier of last resort obligations. If the incumbent telco tears down the copper network, it’s not unreasonable to think that state regulators might turn to the new ETC in an area to serve newly constructed homes and businesses.

I would caution anybody seeking ETC status as part of getting this funding to make sure they are not unknowingly picking up carrier of last resort obligations along with that status. If I was making such a filing myself I would query the regulators directly to get their response on the record.

I will be the first to tell you that I could be off base on this – but this feels like one of those regulatory requirements that could have hidden consequences. I can’t think of any reason why this program would require a new provider to supply telephone service other than for letting the large telcos off the hook to do so. I know that many companies going after this funding would think twice about taking it if it means they become the carrier of last resort.