As a utility, phone companies?called carriers of last resort?are obligated to provide service to customers. To increase profitability, telephone companies would like to be released from the carrier-of-last-resort designation that binds them to providing high-cost, labor-intensive telephone landline service. (Credit: iStockphoto)
PENN STATE (US) ? Deregulating the communications industry may leave rural customers on the wrong side of the digital divide, according to a telecommunications expert.
?Moving away from copper lines is an example of abandoning obsolete technology and embracing technology that is faster, better, cheaper, and more convenient,? says Rob Frieden, professor of telecommunications and law at Penn State.
?But the risk is that we may be creating a digital divide?not necessarily a divide between the rich and poor, but between the information rich and information poor.?
Telephone companies are lobbying for government regulators to free them of their traditional role as a public utility, citing the convergence and availability of new communication technologies, such as cellular phones and fiber optic cable, that make copper-based telephone land lines obsolete, according to Frieden.
However, not all these alternatives are as affordable and as ubiquitous as copper landlines, a problem that could leave many rural residents underserved, he says.
The researcher, who presented his critique at the End of the Phone System workshop held at the University of Pennsylvania on May 17, says that rural customers could replace land line telephones with cellular phones, for example, but most cell phone companies charge a fee for each minute of use?metering?while most fees for land lines are unmetered and are paid through a fixed monthly charge.
Frieden also doubts that cellular service will be as dependable as landlines.
?Cell phone companies have these colorful maps that show how well they cover areas,? Frieden says. ?But there are lots of places?including places in rural Pennsylvania, West Virginia, and New York?that do not have cell phone service, or offer limited services not suitable for broadband, Internet access.?
Fiber optic lines are glass wires that can carry voice, television, and Internet signals. For instance, fiber optic equipment is often used for Voice Over Internet Protocol (VOIP)?a technology that uses broadband Internet to carry such services as voice, texting, and fax.
While fiber optic lines are more common now, they are usually not found in rural or remote areas.
?The phone companies are right,? says Frieden. ?There are other forms of competition now, but these alternatives are not fair or adequate everywhere.?
As communication technologies merge, telephone companies face stiff competition from cable companies, which are classified as information service providers by the government and face limited regulation.
Frieden says that telephone companies, however, are regulated as a utility. As a utility, phone companies?called carriers of last resort?are obligated to provide service to customers. To increase profitability, telephone companies would like to be released from the carrier-of-last-resort designation that binds them to providing high-cost, labor-intensive telephone landline service.
Frieden says that the push to end the phone company?s status as carriers of last resort may be the first step toward complete deregulation.
While telephone company lobbyists suggest that the market forces will ensure that all customers will eventually receive equal service in a deregulated environment, Frieden is skeptical about this promise.
?Everyone wants to say, the marketplace is great,? Frieden says. ?But there?s also something called market failure particularly in rural and low-income areas.?
More news from Penn State: http://live.psu.edu/
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