Monday, May 21, 2012

Wired Phones On The Wane

A brief article caught my attention recently. It seems that some phone companies are petitioning the government for permission to get out of the phone business. Perhaps that is a bit of an overstatement; in reality the companies want the government to release them from providing wired phone service at a reasonable price to most anyone who would like to have it.

It is called Universal Service and the roots of this mandate can be traced as far back as 1913 when the Federal Government gave AT&T a virtual monopoly for providing phone service in the United States. It was restated in 1934 with the Federal Communications Act which called for “rapid, efficient, nation-wide wire and radio communication service with adequate facilities at reasonable charges to all the people of the United States.” The Universal Service mandate assured that all citizens of the country would have phone service and that the phone company would not provide such a service only to the wealthy or only to those in large densely populated cities. That mandate has been modified several times, but to this day requires the phone company to provide a wired service to all but those in the most remote locations.

So why would the phone company want to stop stringing wires? The answer to that question can found by taking a look at your family and friends. Most of us know people who have dropped the traditional wired phone and use only a mobile phone. The younger the person the more likely it is that he or she will use only a cell phone. So with fewer people paying the monthly charge for a wired phone, the less money the phone company makes. Unfortunately, a reduced number of paying customers does not translate into a significant reduction in the cost to maintain the wired network. So there is less profit. And the profits are only going to get smaller.

In the US we have a very robust and reliable phone network. It has been around for a hundred years and at one time was the model for the world. Today a look at developing countries will show that instead of modeling phone systems after ours, these emerging countries are jumping ahead to a cellular network. They will never have wired phones in private homes, only cellular service. Building a few towers serving thousands of customers is much less expensive than stringing wires to remote villages and towns.

For sure the wired phone network in this country is not going to disappear soon. It is that very network that connects many of our cellular carriers and allows for transparent communication between wired and non-wired phones. What may change quickly is having that network continue to include private homes. Having a wired phone hanging on the wall in the kitchen may soon seem as quaint as a milk bottle in the ice box.


Anonymous MikeD said...

I've been reading about this, too. So far, the way I understand it, companies can only discontinue providing wired service if another company is there to provide it. What would happen to those who depend on the wired service for Internet and fax? Communication, along with energy, may be the next big revolutions globally.

3:25 PM  

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