There is no doubt that the venerable wireline carrier, with its aging “copper” infrastructure, is experiencing difficulties in generating profits. No matter what new technologies they invest in, at least for the coming ten years, these aging behemoths will be forced to carry the burden of supporting their old central office structures.

Deregulation …

Deregulation forced carriers to share their facilities with a new class of competitors who simply measured profits as a markup on the telephone services they re-sold, often at a price that undercut the long-time carrier whose facilities they were using.

Cell-phones …

The came the ubiquitous cell-phone and wireline call volume originated from land-line connections dropped significantly.

VoIP (Voice over Internet Protocol) …

Then the weight of the Internet bore down with such technologies as VoIP (Voice over Internet Protocol) which digitized voices and sent them along the Internet as packets of data. All at little or no additional cost other than having an Internet-capable computer with a cheap software package.

Excess fiber capacity …

In the run-up to the so-called dot-com bust, many major companies were building giant fiber networks. Major freeway builders were running straight-line fiber cable through miles of concrete conduit built-in to the right-of-way. Much of this fiber capacity still remains dark and unused. The giant networking companies killed when they continually re-sold fiber access to each others in order to artificially inflate their numbers to meet Wall Street’s profit expectations.

Cable company competition …

Enter the cable companies, many with residential fiber connections who could offer television, Internet  and telephone service for a combined monthly packaged price.

Truly scary events for companies ill-prepared to abandon their original “competing on chaos” tariffs with their slice-and-dice pricing, each subject to promotional discounts and termination costs.

Scaring the “phone” companies …

But what really scares the telephone companies is the coming of over-the-air digital Internet service from the people that actually provide useful content that people want and need. No wires needed. Communications companies, also known as common carriers, lack this content and are thus severely impaired when it comes to bundling content with communications access. Even though cable companies have access to content, they need their expensive cable infrastructure to deliver it … infrastructure which will be quickly obsoleted if “over-the-air” content distribution and Internet access becomes de rigueur.

Of course, the old guard is buying into the over-the-air system, but they do not originate content.

Maintaining the stock price by charging more …

Instead of offering new and better services at lower prices, many cable and telecommunications companies are simply raising their prices for existing services.


Claiming that the networks capacity is being stretched thin by large-volume high-definition video down-loaders. Trying to position those hi-def down-loaders as impairing the rights of  “ordinary” down-loaders. Which somehow requires the miscreant hi-def crowd to pay a premium penalty for their undemocratic actions. A commercial play on the political concept of class warfare.

According to AT&T spokesman Michael Coe, “Usage-based pricing is one way to deal fairly with Internet usage, which is very uneven among broadband users.”

Let’s talk about fairness …

Is it fair to allow certain companies to maintain monopolies when competitive common carriers abound?

Is it fair to use the tariff structure to slice-and-dice simple access services into a dizzying morass of combination, mix-n-match rates all with different promotional periods and severe penalties for switching carriers?

Is it fair to force users into long-term “lock-in” contracts, ostensibly to re-capture the discounted cost of “low cost” telephone gear which becomes obsolescent long before the contract runs its course?

But the major question remains: Is it fair of the common carriers to refuse to continue to build out the network to the standards of capacity and service that is routinely enjoyed in other companies?

I could also ask that all government subsidies and money flowing from government contracts be completely and fully disclosed to the American public as part of an “open government” initiative.

And for the conspiracy buffs …

Speaking of a more open government, and the Bush Administration’s effort to shield the telephone companies from the consequences of providing consumer telephone information to agencies without court orders, might this move toward the “deep packet mining” necessary to determine message content type be turned against the people in allowing the common carriers to monitor the content as well as the content type?

The meaning of network neutrality …

Network neutrality has come to mean that no class of Internet service (e-mail, web-surfing, VoIP communications, audiovisual downloads) is given time-based priority. An issue felt deeply by American business when the ISPs (Internet Service Providers) tried to float a trial balloon calling for the per-message pricing of e-mails as a method for reducing spam. And later as a guaranteed method of penetrating the carrier’s (think AOL) proprietary e-mail boundary.

Is the Federal Communications Commission the enemy ..?

In many ways, the FCC, consisting of Administration political appointees goes far beyond its original purpose of providing broadcast frequency technical specifications, issuing station operating licenses, licensing broadcast engineers and arranging the frequencies of competing carriers to avoid undue signal interference into regulating content (see George Carlin’s Seven Dirty Words) and political usage of the airways. In many ways they act in political concert with the broadcasters and others they regulate. So, while they may not be the enemy to watch, they certainly are suspect on pure political grounds.

What can YOU do?

Keep competition alive and healthy by switching carriers if one carrier offers a better deal.

Write your legislators and demand “network neutrality” for all types of Internet traffic. Also demand that we take steps to modernize the Internet by promoting the use of private capital to build out existing networks and infrastructure.

Join an organization such as the Electronic Freedom Foundation to assist in preserving your rights in this digital era. Especially when there is little or no existing law that may cover Internet usage by individuals and that the application of old laws proves to be manifestly unfair. www.eff.com.

With America’s overwhelming dependence on the Internet, it is reasonable that a government-private industry coalition should exist for the common good. There is also no reason why a company should not earn a fair return on its profits. However, due to the massive investments in infrastructure, these companies have become de facto monopolies and should be subject to additional government oversight to protect against anti-monopoly and anti-competitive behavior. 

-- steve

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Reference Links:

AT&T Mulls Surcharge for High DSL Use - TheStreet.com One Citizen Speaking...: BUILDING THE TOLL ROAD: Time Warner Cable ...

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