Telcos Tip-Toeing Away From Wired Phone Service
Forbes and others report that New York’s Attorney General, Eric Schneiderman, is frothing over Verizon’s offer to Fire Island residents to replace their wired phone service with wireless for about the same cost. On the face of it, this is a reasonable business choice that a company ought to be able to make. Verizon apparently doesn’t see it’s future in wired service so is making a strategic decision to step away from the public switched telephone network. With VoIP firms nibbling at their lunch, it’s not surprising that the big telcos are looking to get out of providing infrastructure heavy landlines.
Before we get indignant about interference by civil servants, there’s some important public policy history and interests to consider. Firstly, these companies held a privileged position for many decades and in many respects continue to do so. Because landline phone service barriers to entry are so high, it has been in the public interest to monitor rates and competition for this essential service. So, while heavily regulated to be sure, they have largely been an oligopoly with the premiums that that implies. If they don’t have an entirely free hand now, perhaps that’s the price they should pay. And on a practical level, the public good of offering landline access to every citizen hasn’t dramatically changed. It’s true that internet and wireless phone service now offers very nearly an equivalent quality of service, but there’s enormous value in landlines’ reliability and the redundancy of multiple channels. Internet, wired and wireless each have their strengths and vulnerabilities. This lesson was brought home during the power outage of 2003 in the Northeast different services and carriers degraded at different rates so that for a while when one communications avenue was lost, there was often another one to retreat to. We all live on an island in one way or another and in a disaster it’s prudent to have more than one way to contact the outside world. New York’s AG is justified in holding Verizon to its social contract.
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