Navigating Upcoming Changes in the Telco Environment

Melissa Swartz | No Jitter | July 23, 2014

No-Jitter-Logo-borderThose responsible for their organization’s communication technology must recognize that changes are coming and navigate to safer alternatives.

It’s easy to complain about the phone companies. And it’s ironic that, as “communications” companies, it’s so darn hard to communicate with them.

In all fairness, they are struggling to address changes in technology and in behavior while still meeting their obligations to make a profit for their shareholders. Networks are migrating away from copper to fiber, from wired to wireless, and from circuit switching to packet (IP) switching. ILECs (Incumbent Local Exchange Carriers) are caught between requirements to support legacy networks and the need to invest in new technology.

While AT&T and Verizon are seeking FCC regulatory changes that will speed the transition to IP networks, they are not leaving it up to the regulators. Price hikes on TDM services have been significant and widespread; in other areas copper lines are no longer offered. These changes will motivate customers to transition much faster than regulatory activity.

Customers are migrating away from the older networks in droves. According to The Wall Street Journal, “nearly 40% of U.S. households now have no landline phone.” Yet the cost to maintain these legacy networks does not decrease, resulting in a huge increase in the cost per user to support legacy services. No wonder the carriers don’t want to invest in that infrastructure.

In working with our clients across the U.S., we see many instances where copper infrastructure has been allowed to degrade and is taking longer to repair. For all but the largest accounts, customer service from the carriers is remote, centralized, impersonal, and greatly dissatisfying. Billing is inaccurate and very difficult to correct. Ordering and installing services is much harder than it should be. And there is little hope that any of this will improve.

While many are concerned about the transition away from analog services and the impact this will have on rural and elderly users, others worry about how this change will impact 911 service, burglar alarms, pacemakers and even systems used by air-traffic controllers. The FCC says it will make sure that “consumers and the enduring values established by Congress are not adversely affected.”

Others are concerned about the move to IP networks from a regulatory perspective. According to The Wall Street Journal, “In the early 2000s, the FCC decided to regulate broadband Internet service with a lighter touch. The agency also freed companies from rules requiring them to sell space on their Internet protocol-based, fiber-optic networks to other companies at regulated rates…Smaller phone and Internet service providers say it isn’t fair for AT&T and Verizon to escape oversight by shifting to a different type of network. Those rivals depend on access to the giant carriers’ networks–and fear it could be threatened as chunks of the traditional phone network are shut down.”

Businesses Can Take Steps
It will take a while for all of these issues to be resolved. In the meantime, what can businesses (and consumers) do to mitigate the impact of these changes to themselves?

1. Recognize that the carriers are investing in fiber, IP, and wireless technologies. If you have the choice, these are the types of services you should be using or moving toward. Look seriously at SIP trunking and wireless options when fiber is not available.

2. Negotiate for defined levels of customer service support when you are getting new services, and make sure that anything you are promised is part of your contract.

3. Understand that IP-based services are not regulated in the same way that TDM services have been. While service provider contracts still often refer to a Service Guide that resides somewhere on the Internet (thus appearing to be similar to regulated TDM offerings), there is much less regulation in the IP environment. This means that you have much greater ability to negotiate terms and conditions and pricing in your agreements. You also have much less protection than that provided by state and federal regulators for TDM services.

4. Pay attention to the Service Level Agreements for IP-based services. The typical language initially offered by a carrier has, in my experience, little to no meaningful recourse for the customer who does not negotiate.

These existing networks have played a critical role in the telecommunications industry. As their future becomes uncertain, those responsible for their organization’s communication technology must recognize that changes are coming and navigate to safer alternatives. There is still time, but the pace of the changes is picking up and pricing or availability strategies may drive behavior long before the regulators approve new models.

This column was originally featured on No Jitter as part of the contributors column “SCTC Perspectives,” a weekly post written by members of the Society of Communications Technology Consultants (SCTC). The SCTC is an international organization of independent information and communications technology professionals serving clients in all business sectors and government worldwide.

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