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.