Today, the FCC convenes the first meeting of its “Technology Transitions Policy Task Force,” a new intra-agency group announced in December by FCC Chairman Julius Genachowski.
The bland name belies a radical charter for the Task Force. Its goal is nothing less than to review thousands of pages of yellowing FCC rules and regulations and recommend how to adapt or eliminate them to reflect the utter transformation of 20th century telephone, radio, television and data networks—all of which are in the final stages of conversion and upgrade to native Internet technologies.
Monday’s agenda is simply to orient the group to existing technologies, usage patterns, and the on-going evolution of what I call “Internet Everywhere”–the dynamic ecosystem of network operators, device manufacturers, app developers and consumers that is creating new businesses and new value every day.
But here’s what the Task Force should do as its first official act: pick a date, right now, to permanently retire our obsolete circuit-switched telephone network. And make it soon.
The old telephone network is just the latest victim of the Internet revolution, which began slowly but which has accelerated in the last decade. As better and cheaper voice services have appeared from cable, fiber, and dozens of over-the-top Internet providers including Skype, Google, and Vonage, fewer customers rely on the old wireline network every day. The residual value of its assets—switches, copper wiring, and other equipment—is falling fast. Maintenance costs are soaring.
We should put it out of its misery.
The engineering beauty of broadband IP networks, which are well on their way to replacing the circuit-switched networks, is that they don’t care what kind of communications flow over their ever-faster networks. We’re already well on our way to Internet Everywhere, where voice, video, and data packets move seamlessly over a single IP infrastructure, regardless of whether their ultimate destination is a television, a tablet or a home sensor. As Nicholas Negroponte so succinctly explained it almost twenty years ago, “bits are bits.”
For most consumers, the transition to Internet Everywhere has proven easy–even obvious. But for the affected industries and the regulators who oversee them, the transition is traumatic.
Driven by the counter-intuitive economics of the Internet and computing technology, the spread of Internet Everywhere is deconstructing the supply chains in a wide range of once-mature industries, including broadcasting, telecommunications, mass media, computing and consumer electronics, to name just a few.
It may be the best example yet of what Paul F. Nunes and I call “big bang disruption”: an innovation that is simultaneously faster, cheaper, and more customized than the existing services it’s replacing. (Watch for our new Fobes.com column on BBD, launching soon.)
To their credit, the incumbent providers of circuit-switched networks have recognized the need to retire quickly what had been, until recently, their most valuable assets. Both Verizon and AT&T have spent billions accelerating the replacement of copper with fiber, and circuit-switched with packet-switched equipment. In November, AT&T announced an additional $14 billion in capital expenditures over the next few years, making its IP-based U-verse (wired) and LTE (wireless) available to millions more consumers.
But turning off the old network isn’t as simple as it sounds. That’s because regulators at the federal and state level still treat switched telephony as if it were not only the dominant voice service, but in many cases as if it were the only choice—as it was back in the 1930’s, when communications industry regulation began in earnest.
The maintenance, usage and pricing of legacy infrastructure, for example, are still subject to often-minute oversight by an alphabet soup of federal and state regulators. Leftover rules from the early 20th century days of monopoly carriers and equipment providers even make it difficult for wireline providers to terminate services without permission, even if they are replacing those services with something better and cheaper.
It’s urgent that we break that logjam and wind down the old network as soon as possible. A swift and speedy transition would make it easier for consumers and network providers alike to accelerate the build-out of new, native IP networks, which are faster, more efficient, and cheaper to maintain. It will also speed the process of getting the roughly 30% of Americans not already part of the broadband revolution to join it–the top priority for the FCC since the 2010 publication of its visionary National Broadband Plan.
The FCC has an unavoidable role to play in the process. As communications markets are being simultaneously destroyed and recreated, regulations designed to dull the sharper edges of once-static and siloed technologies are now, as the agency recognizes, posing the very real danger of unintentionally holding back the progress of innovation. The agency must unravel itself from its complicated relationships with the affected industries.