The Industry

Verizon Phasing Out Copper Services

fios vanVerizon has asked the FCC for permission to discontinue a number of legacy copper-based products in the Northeast. This signals the company’s ongoing plan to pull down copper wires and go to an all-digital network.

Specifically Verizon wants to eliminate their Voice Grade, WATS Access Line, Bonded Digital Link, Digital Data, and DIGIPATH Digital Service II. These are somewhat obscure services, mostly used by businesses, and which for the most part have been supplanted by better products over the years.

What this filing doesn’t specifically say is that Verizon will eventually accompany this tariff change by a request to remove their copper network. That’s what they did earlier this year in New Jersey.

I find it hard to criticize the company for wanting to move customers from copper to fiber. I have a lot of small telco clients who have done the same thing over the last decade. There are a few customers that worry about such a transition because they have some legacy function like fax machines, health monitors, burglar alarms or T1s that they are afraid won’t work with the updated technology. For the most part there are not very many such applications around that can’t be made to work on fiber. Fiber technology can emulate almost every TDM copper-based function.

There comes a point where it doesn’t make economic sense to maintain an old copper network for a tiny handful of customers using old applications. I have a hard time thinking that customers have a right to stay on copper when there is something better available.

But I also think the public unease over these transitions is because the public doesn’t trust Verizon. Verizon got a lot of bad press after hurricane Sandy hit Fire Island and the company wanted to replace the destroyed copper with cellular service.

The problem is that Verizon doesn’t have fiber everywhere –not even close to everywhere. What happens where there is no fiber availability? When Verizon built FiOS they only built fiber where the costs to do so were low, and this resulted in a patchwork fiber network – where one street or one subdivision has fiber, but the next doesn’t. The company also largely built fiber in the suburbs of the major cities and they largely ignored downtown urban neighborhoods as well as smaller towns and all rural areas.

AT&T is being open about its plans to move homes to a fixed cellular connection. But as Verizon starts pulling down more copper they are either going to have to build new fiber to people or offer the same kind of cellular connections as AT&T. And it doesn’t seem likely that Verizon is going to extend FiOS fiber networks today to neighborhoods they judged too expensive to build fifteen years ago.

Verizon’s union members have been complaining for years that the company has been neglecting the copper plant – and these technicians are right. It’s a behavior we have seen from all of the large telcos for decades. Twenty years ago Verizon started trying to find a buyer for their network in West Virginia. It took them more than a decade to finally sell it to Frontier, and during the interim they cut maintenance to the bone. But this is not a singular example and huge parts of the Verizon, AT&T and CenturyLink networks are in bad shape due to many years of neglect.

The shift away from copper is inevitable. A lot of these networks were built in the post WWII decades and they have lasted longer than intended. It’s a testament to the high standards of the old Ma Bell system that these networks are still working today. Critics of Verizon want the company to maintain the copper networks for a few more decades – but that is unrealistic, and in many cases becoming technically impossible, and it’s time to shift focus to make sure Verizon doesn’t start quietly dropping homes and leaving them stranded with no communications options.

Regulation - What is it Good For?

Regulatory Shorts for April 2016

Here are a few things of interest happening in the regulatory world:

Copper Retirement. The FCC’s new copper retirement rules went into effect on March 24. The rules require that any telco tearing down copper must give residential customers 90 days notice and business customers 180 days notice.

While this rule very well might be aimed at Verizon who has been retiring copper with short customer notices, it applies to everybody. This is something that anybody replacing a copper network with a fiber network needs to be aware of. Verizon has been forcing customers to abandon the copper, and that act requires this same notice.

Appeals of USAC Rulings. The FCC recently decided that anybody who wants to appeal a ruling from USAC must formally first appeal the process at USAC and can then only bring the issue to the FCC after losing that appeal.

This is an interesting ruling and probably speaks to the volume of complaints the FCC has been getting about USAC. As telephone landlines have been falling the revenues that feed the Universal Service Fund have been decreasing. USAC has made up shortfalls by constantly raising the USF surcharge, which is now up to an 18.2% surcharge on interstate revenues, and back in 2010 was only 12%.

But USAC has also been getting more aggressive in defining the items to which the surcharges apply and have made retroactive rulings against a number of carriers on various issues. With this new process a carrier will have to go through the USAC formal process before starting any complaint at the FCC, which will greatly increase the time during they might be liable for disputed retroactive surcharges.

Broadband Labels. The FCC has unveiled their suggested labels where carriers can report facts about broadband such as cost, price, speeds, latency, etc. The labels look surprisingly like food labels. It’s often been impossible for customers to find a lot of the information that the FCC wants reported to customers.

No company is required to use the suggested FCC format, although a number of large companies like Verizon, Google and CenturyLink had input into creating the format. For now only large carriers with more than 100,000 broadband customers are required to report this information to customers. But small companies that have a superior broadband product compared to your competition ought to strongly consider doing this anyway. I also strongly recommend you look closely at the labels issued in your areas by large competitors to make sure they are being truthful.

Cancelling Service On-line. There is currently a bill in the California legislature that requires any company that sells services on-line to also allow customers to disconnect services on-line. There are companies like Comcast who are notorious for making it difficult to disconnect without going through a long spiel from a service rep.

The process of making it hard to disconnect started with AOL who was infamous in the day for making it extremely hard to drop their dial-up service. But many other ISPs have started win-back programs that make customers tell the company why they want to disconnect while also listening to a host of special offers trying to get the customer to stay.

While currently this is only proposed in California, we’ve often seen that ideas from California, New York and Illinois often make their way to many other states within a few years.

Regulation - What is it Good For?

FCC Orders Rules for Copper Retirement

The FCC in Docket FCC 15-97 issued some new guidelines for telcos that are going to cut customers off copper or impair legacy services. The same order also asks further questions in the firm of a Further Notice of Proposed Rulemaking. This docket is part of the ongoing effort that has been called the IP Transition, where the national goal is transition from the traditional PSTN to an all-IP network.

One of the primary results of the order is notice to customers. Notice is of two types – notice to end-user customers and notice to other carriers. The new requirement is to give a three-month notice to residential customers when they are going to lose copper and give a six-month notice to business customers. Phone companies would be allowed to retire and remove copper with no notice as long as no customer service is discontinued, reduced, or impaired.

The order clarifies that ‘retirement’ means de facto retirement such that a carrier changes the service so that legacy products are no longer available. This means that a phone company can’t arbitrarily cut customers from analog copper services to a digital equivalent without supplying this notice. This is something that companies that are upgrading customers from copper to fiber need to take notice of and be prepared to notify your customers in a timely manner before the transition.

The FCC has taken note that there are legacy services that can be impacted by removing copper or from shifting to IP. For example, there are some burglar alarm services that still run off copper phone lines, although most providers of these services can readily switch over to an IP connection. There are also some old fax machines that cannot easily be made to work on VoIP and work only on copper. But for most homes, moving from a copper to a newer network has very little practical effect, except perhaps for the fact that their phones will no longer be powered by the network, which the FCC addressed in another Docket.

There can be a much bigger impact on businesses. I’ve worked with clients recently that are still using numerous ISDN connections and T1s provided over copper. There are also still huge numbers of business key systems and PBXs that are fed by T1s and PRIs. When a telco is going to discontinue these services they often require a business to make a big expenditure. This could entail buying a new phone system, new phones and perhaps even finding a new provider if the phone company can’t supply the new connection they are going to need.

The biggest issue I see with getting rid of copper is where the phone company doesn’t have an alternate landline network ready for the transition. It doesn’t seem like a big issue to me when a company like Verizon wants to move customers from copper to FiOS. There have already been tens of millions of customers who have changed from copper to either FiOS fiber or to a cable company network who have experienced and accepted the required changes.

But AT&T has said that they want to walk away from millions of rural copper customers. That would force customers to migrate to either the cable company or to cellular wireless. This could be a huge problem for business customers because there are still a lot of business districts that have never been wired by the cable companies. And even where a business can change to a cable company network, they are not always going to be able to buy the services they want from the cable company. For example, those businesses might be using trunks or Centrex today that isn’t supported by their cable provider. These businesses are going to be facing an immediate and expensive upgrade cost to keep the kind of service they have always had.

And of course, once you get outside of towns there generally is no alternative to copper other than wireless. As bad as rural DSL can be, having a 1 Mbps DSL connection is still better than having to use cellular data for a home broadband connection. At least DSL has unlimited usage where most cellular data plans have tiny data caps. And unfortunately, there are many rural areas where cell phone coverage is poor or non-existent. Cutting down copper in those areas would be basically cutting homes and businesses off from any communications.

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