“The telephone network is obsolete”: Get ready for the all-IP telco

Two months ago, AT&T petitioned the Federal Communications Commission to plan for the retirement of traditional phone networks and transition to what AT&T sees as an inevitability: the all-IP telco.

AT&T had been discussing the transition internally, spurred on by the FCC's own suggestion that the Public Switched Telephone Network might be ripe for death somewhere around 2018. "This telephone network we've grown up with is now an obsolete platform, or at least a rapidly obsolescing platform," Hank Hultquist, VP of AT&T's federal regulatory division, said today. "It will not be sustainable for the indefinite future. Nobody's making this network technology anymore. It's become more and more difficult to find spare parts for it. And it's becoming more and more difficult to find trained technicians and engineers to work on it."

Hultquist was speaking as part of a Consumer Electronics Show panel titled "Introducing the All-IP Telco." The panel was moderated by Daniel Berninger, founder of a startup called VCXC (the Voice Communication Exchange Committee) devoted to speeding the transition to all-IP networks.

Although going all-IP signals the death of traditional telephone networks, Hultquist believes Internet Protocol-based networks will give voice calls a higher quality and greater importance. He looks forward to the integration of voice throughout the Web, something that is already happening with the likes of Skype on Facebook and Google Hangouts.

"Voice is the most efficient way to communicate," he said. "We have had the same voice service for 80 years. The voice quality you get when you make a call on the iPhone today is the same voice quality Bell Laboratories thought you should have in 1933. Shift forward 80 years, we're still using the same frequency response, 300 to 3300Hz." The human voice can make sounds at frequencies up to 20,000Hz.

When everything is IP, the telecom industries and IT industries will basically become one and the same, Berninger said. It'll be important to make the transition while preserving what's good about traditional phone networks, such as reliability and 911 services, he noted. In doing so, companies like AT&T will shed lots of complexity and potentially save a ton of money. AT&T's network services and content delivery would all be delivered using the same technology.

Obviously, an all-IP network lacks any traditional circuit switching. "If you take a central office, pull out all the TDM (time-division multiplexing) equipment, and put in all IP equipment, guess what happens? The central office disappears," Berninger said. "The first thing the telcos get is a whole lot of free real estate. … It's going to be a really great thing for AT&T. BT made a lot of money when they switched over to IP."

The switch to all-IP telcos will be far more complex than the switch to all-digital television, Hultquist said. "TV was one service. Phone companies like AT&T have thousands of services based on this legacy technology," he said. Why thousands? Hultquist notes that when you order traditional phone service, you choose from "a dizzying array of diff combinations of features: With voicemail, with caller ID, without caller ID, with various kinds of dialing capabilities."

Each different combination represents a service, or USOC (Universal Service Ordering Code), in the phone companies' parlance. Merging all of these into fewer IP services will help make service providers more efficient.

Of course, many customers have already switched to all-IP networks themselves, ditching landlines for cell phones and VoIP services. "We do believe there are significant opportunities here for expense savings," Hultquist said, noting that the numbers of Americans with landlines have dwindled. "There are some cost savings opportunities here and it's a good thing because the base of customers supporting that platform is so much smaller now than it was ten years ago."

In AT&T's aforementioned petition to the FCC, the company suggests some very preliminary steps. This would include in certain cities or regions to retire TDM equipment completely and deliver phone services using the Internet Protocol. Testing all-IP networks at a small scale may help identify potential technological roadblocks. The trials would not be exclusive to AT&T—any phone company could participate. The FCC is taking public comments on AT&T's proposal.

Less government interference, please

Of course, AT&T is also hoping for a more friendly regulatory environment (that is, a less extensive regulatory environment) as part of the IP transition.

"AT&T believes that this regulatory experiment will show that conventional public-utility style regulation is no longer necessary or appropriate in the emerging all-IP ecosystem," AT&T wrote in its petition to the FCC. "Monopoly-era regulatory obligations" aren't justified in the competitive marketplace known as the Internet, the company said.

The CES panelists repeatedly stated that today, telecom is a regulated industry while the Internet essentially is not—and they want to keep it that way.

Daniel Brenner, a newly appointed Los Angeles County Superior Court judge who was previously an attorney specializing on FCC policy and regulatory matters, expressed glee that a recent UN meeting did not result in the International Telecommunications Union "taking over" the Internet. Brenner says things like network neutrality should also die at the US level.

"If we oppose Internet regulation at the international level because it doesn't make sense, we need to make sure Internet regulation in the US does makes sense," Brenner said. "Network neutrality was very controversial. And really for many of us who didn't think that was a wise decision, it's because you needed market failure, something going on in a market that causes the regulator to come in. That hadn't really been demonstrated to the minds of many of us in the net neutrality context. Don't make it worse by regulating."