In 2019, the FCC issued order 19-72A1 at the request of US Telecom, giving the green light to the retirement of analog technology and investment into next gen communications.
For two decades, the Telecommunications Act of 1996 stood, until it was overruled in a 2019 ruling by the FCC reversed portions of the Act that supported and required maintenance and access to analog telephony services (Analog TDM lines.) In the years following the 1996 act, next-generation technologies such as VoIP and cellular transmission matured to a point of providing a valid alternative to the traditional copper wire.
The order itself is filled with technical and legal terms that can be hard to understand without digging in. The purpose of this article is to simplify the FCC 19-72A1 ruling to make it more easily consumed and understood by the very businesses it will and has impacted.
Part 1: Where we started
Wikipedia reports the Telecommunications Act of 1996 was a reaction to the breakup of the AT&T Bell companies. Before the act in 1996, telephony was regulated in a way that allowed certain providers to gain a monopoly over a particular footprint. The FCC found that this hindered competition, and resulted in higher costs to the end-user. By 1996, the realization that this mode of providing telephony services was not in the best interest of all users, and as a result, the Telecommunications Act of 1996 was passed. The Federal Communications Commission (FCC), stated that the goal of the law was to “let anyone enter any communications business – to let any communications business compete in any market against any other.” Another main goal was to deregulate the converging broadcast and telecommunications technology.
A key component of the act was the requirement that the local exchange carrier (LEC) open up their networks to allow competitors to sublet lines to provide services. Additionally, the LECs were required by law to maintain the copper wires that connected our phones and provide reliable access to the “Last Mile.” With this maintenance requirement, the provider had to come up with the funds to replace these aging wires that their own networks and sublet providers used. The only difference was, the sublet providers did not have the overhead costs to maintain an infrastructure that was largely deteriorating.
As a result, a law that was intended to foster competition for the major carriers instead was put at an unfair disadvantage.
Part 2: State of the market at the time of the FCC 19-72A1 ruling
Subscribership of traditional TDM lines, according to the FCC, amounted to approximately 94% of households in 1996 when the act was commissioned. In the time from 1996 to 2019, new technologies were entered into the market, including mobile phones and VoIP. As these new technologies gained popularity, subscribership fell at such a rate that the FCC felt compelled to act. In May of 2018, the US Telecom Broadband Association petitioned the FCC to forebear the ruling of the 1996 act. In their petition, they state “These outdated rules distort competition and investment decisions. When outdated and overly restrictive regulations are rolled back, innovation and investment thrives.”
Because of the petition, the FCC took up the issue of the unbundling requirement within the 1996 act. The Commission ultimately voted to remove the unbundling and maintenance requirements of the incumbent LECs because their data showed:
- TDM share of wireline connections fell from 82% to 37% from 2008-2017. During this same period, interconnected VoIP connections rose by 300%.
- Residential subscribers were also following suit, with residential reliance on traditional switched access services (POTS) falling by 71% but VoIP subscriptions rose by 104%.
- Even more telling was the number of businesses that made the switch. The percentage of businesses using POTS lines fell by 49% while business VoIP rose by 1,062%.
- In just one year, from June 2016 to June 2017, voice subscriptions relying on unbundled loops dropped from 2.6 million to 1.8 million, a more than 30% drop.
With this data, it was apparent that the requirement on the incumbent LECs to maintain both the analog and IP-based networks were stopping them from investing in next-generation network infrastructure. Furthermore, US Telecom theorized that if the requirement was removed, it had the potential to add 6000 jobs to the market and increase economic output by $5.4 billion over the next 10 years.
Part 3: Moving forward
In conclusion, the FCC determined that the forbearance (or relief from) the required maintenance and access needs would occur in a two-part transition:
- Competitive Local Exchange Carriers (LECs) would be able to continue to purchase new lines for 6 months following the effective date of this order, which was August 2, 2019.
- A time frame of 3 years was given to allow providers and subscribers alike time to make alternative arrangements for the analog TDM lines.
Several objections were raised to this forbearance request, including the desire of some subscribers to continue operating on copper wires and the unique ability of the TDM wires to function even when the electricity is off. The FCC felt that there are sufficient alternatives to maintain a connection without an electrical signal and that it is against the subscriber’s best interest to remain reliant on these legacy technologies. The reasoning is that they are not able to prove that there is not an alternative the subscriber can access as the next generation technology has matured to the point of being able to overcome most, if not all, of the legacy communications features.
What does FCC 19-72A1 mean for you?
The timeline of the switchover will largely depend on where you live. Some locations have already received the notice of the retirement of the legacy systems and given the deadline to switch over. The FCC 19-72A1 ruling does indicate that all lines should be out of service by August 2, 2022
Regardless, the choice is not about keeping TDM analog loops or moving to digital IP connections, rather how you will transition and when.