Regulation and Innovation

Google has a pilot to offer TV and high-speed Internet service in Kansas City.  Adding phone service would have cost them practically nothing, and presumably would have provided great value to its customers.  But it gave up because even for a company as large as Google, the regulatory start-up burdens were too large.  Many innovative new industries or new approaches to old industries have been started literally in someone's garage.  But no one with a better idea for local telephone service is ever going to make progress against these kinds of regulatory barriers.  Which is exactly what the large incumbents want, and why they secretly support these massive regulatory infrastructures (while publicly whining about them).


  1. marque2:

    Not so fast Warren. Verizon has divested itself of landlines, because they are unprofitable. AT&T is trying to convince the government to let them introduce 4G wireless in Rural areas, instead of maintaining the old phone network.

    Article was just posted today - if you don't pay for a subscription to WSJ, look this up in google

    "AT&T Seeks a Lifeline on Land Lines" and click on the link there.

    There is no money in traditional phone service anymore, everyone wants out - unless they can figure ways to replace it with phone over IP. And yes it is the Government and activist groups holding everyone back (How will Grandma make a phone call? - Well get her a Tracfone for less than $10 per month)

  2. Matthew Slyfield:

    Note: from the article AT&T is not looking to drop all land line service to the entire country. They are looking to end the obligation to have to provide such service to remote areas where the cost of physical infrastructure is too high on a per customer basis to make it profitable. The land line network would still be maintained in dense urban areas where the population density is high enough for it to still be profitable.

  3. marque2:

    Yes, but that is the beginning of the end. AT&T leadership is not dumb. 10 years from now the only use for a copper wire even in urban areas will be to get DSL - and by then it is possible that 5G or the "Bieber 6G fever" cell phones will replace DSL and cable internet completely making the POTS and terrestrial cable enterprises worthless. Even your TV will have a cell phone receiver built in and everything will be streamed over the cell towers.

    AT&T wants to pull out of it all.

  4. marque2:

    I am also not sure how google can not offer phone service, but Vonage, Ooma, and Magicjack can. Google already offers phone service through its email accounts, all they have to do is offer an internet plug in google phone box. Who wants google to reinvent POTS service, when the future already exists.

    The only issue I would see is if they are trying to offer it on the wireless bands and are trying to set up wireless routers all over town for cell phones, and the city won't allow that. But even there AT&T seems to have a large network of wireless router access points.

  5. Matthew Slyfield:

    Actually AT&T has a service called Uverse. This provides TV and internet at speeds comparable to cable (well above DSL) on copper wire at a cost comparable to cable internet.

    No, AT&T doesn't want out of POTS per say, they want out of the obligation to serve remote areas that are unprofitable.

    Cellular technology doesn't make those areas profitable to serve, especially not at broad band speeds. There are plenty of rural areas in the continental US where cellular infrastructure is still only 3G and even then signal in many areas is too weak for anything other than basic voice service if you can get a signal at all.

    Another 10 years isn't going to change this. It will never be profitable to serve remote rural communities with data access at the same speeds as can be done in dense urban areas. Those rural areas might manage to get 4G some time around the point that 6G has 50% penetration in the urban markets and by then 7G will be hitting the market.

  6. marque2:

    Another 10 years and the POTS debate will be moot. No-one will be using it any more, except two old Grandma's. Uverse is optical, and primarily for Internet and Cable like services, not POTS, but as I said above wireless technologies will probably make Uverse obsolete too.

  7. Jon Nyman:

    I love my google phone service. In conjunction with Obi110 (or whichever one I have). Cost? $45 for the Obi device and free for google phone calling.

    I think they don't charge for their service because of the regulatory burdens, not sure though. Every year they say, "Free for another year!" Don't know how long they will be doing that.

    It would be nice if the government would be a free market. Then maybe I could link my Obi 911 calls to a 911 dispatcher. Currently I have to use my cell phone if in need of 911.

  8. Matthew Slyfield:

    I have Uverse service. It is optical to the local switch only. The last mile is two twisted pair copper wires. Local phone service is available through Uverse in some but not all areas.

    Wireless may eventually make cable and Uverse and pots obsolete but it isn't going to do so with in the next 20 years without leaving the remote rural customers with NO telcom options. It wont be anymore profitable to provide 5,6,7,8,9 or 10G service to the remote rural customers than it is to provide them with POTS service. The only way to make it profitable is to allow the service providers to charge more to rural customers. The problem is most of the remote rural customers wouldn't be able to afford it.

  9. Matthew Slyfield:

    If you think it is really POTS technology and not the universal service requirement that AT&T wants to dump offer to let them drop pots but they have to provide universal service to rural areas at no more than one generation behind the latest wireless tech.

    I can tell you what their answer will be: Not just NO, HELL NO.

  10. sabre_springs_mark:

    If you read the Article, AT&T wants to offer folks in rural areas 4G phone service, which they currently don't have as a replacement for POTS. Somehow AT&T thinks that is a better deal for them.

  11. sabre_springs_mark:

    Read the article for comprehension this time. AT&T does want to offer universal service in exchange for dropping pots.

  12. David:

    The article mentions 1% of people who get dropped with no replacement. That is clearly an issue to be resolved.

  13. marque2:

    Even under today's POTs there are homes without service.

    A good libertarian would say, if you are hanging out so far in the woods that they have to spend a million just to get a phone service too you, that you should probably be taking care of yourself. It is after all your choice to live in the boondocks. If you want full city services move to Manhattan. Why should all the rest of us subsidize your phone service if you choose to live deep in the woods?

    I am sure someone will come up with a plan for say shared satellite service. Or if the road is traveled enough, maybe an older style cell tower is tenable. And those "lifeline" taxes we all pay for phone service could be used to subsidize AT&T to maintain service in remote areas.

    In CA we collect 3 million dollars a year for a program to put up solar powered phones on the edge of the freeway, so you can make a call from the side of the road in an emergency. Apparently no-one wants these phones any more since cell phones have pretty much replaced them. The program has a huge surplus, and those funds, at least in CA could be redirected to something useful, like providing cell service on remote highways and roads. If the government mandates, it should pay.

  14. John David Galt:

    I'd rather have VOIP than analog phone service anyway, mainly because I can program my computer to filter out calls I don't want, without having to pay for an extra feature. "POTS" phone service is so overregulated it *should* go away.

    Now let's get to work on preventing the ITU from doing the same damn thing to the internet, which is fine the way it is.