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4G Kills the Copper Plant

Dan Jones
11/9/2012
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8:25 PM -- We can't rewind; we've gone too far.

It's been a big week in storms, elections, events and awards here at Light Reading Mobile and maybe for you, too.

But we can't ignore that the two largest phone companies in the U.S. are moving more quickly to kill off fixed phone lines, DSL and rid themselves of expensive copper infrastructure and the legal requirements that surround it. These technologies are to be replaced with either 4G Long Term Evolution (LTE), IP broadband fiber or some combination of both.

Verizon Communications Inc. (NYSE: VZ) CFO Fran Shammo hammered the newest nail into copper's coffin this Thursday at a Wells Fargo Securities LLC conference. (See Verizon CFO: Spectrum Sale to 'Play Out' in Q1.) "I think we're on a good path to execute on what we've talked about on the copper-to-fiber migration," he told the crowd. "We have already gotten relief from a number of states on carrier of last resort, we're no longer called the carrier of last resort in a number of states we deal in," he said.

Carrier of last resort -- or COLR to its friends -- refers to the legal requirement that every American household should have access to a phone. Shammo said that Verizon is taking the local route to free itself of pesky COLR requirements. Traditionally, the states -- rather than the Federal Communications Commission (FCC) -- have handled the COLR rules for carriers.

Nonetheless, AT&T Inc. (NYSE: T) revealed Wednesday that it has petitioned the regulator over ways to update its rules so that wired or wireless IP systems can be considered as a replacement for the traditional copper phone-line system as part of a $14 billion investment plan in 4G and IP Broadband. (See AT&T Puts Up $14B to Boost Broadband.)

"AT&T has also filed a petition with the FCC today suggesting issues to consider in our ongoing work to modernize our rules for the evolving communications market," stated FCC Chairman Julius Genachowski about Wednesday's petition.

"As we review AT&T's filing, we will focus on the principles that have guided our actions since I became Chairman: driving the virtuous cycle of private investment and innovation in the broadband ecosystem, promoting competition, and protecting consumers."

Getting rid of copper stands to save carriers lots of money over the long term. Wall Street may wince at the money AT&T is having to spend for these upgrades but its probably the price of remaining competitive within the next few years.

For consumers, these developments clearly throw up a couple of questions:

  • If AT&T or Verizon are not the carrier of last resort anymore will another -- obviously smaller -- operator be able to take up that role, or it just simply an outmoded concept now?
  • In the light of Sandy and other recent disasters, will the FCC be able to come up with reasonable backup and redundancy requirements for wireless and other IP networks? (See Sandy: The Case for Better Cell Site Backup?.)


Or, as we move into the age of small cells, mobile video and voice-over-IP as the medium and mechanism of communications is that too simply a laughably outdated idea? (See Small Cell Service: If 9 Was 6.)

Let me know what you think.

— Dan Jones, Site Editor, Light Reading Mobile

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paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:17:53 PM
re: 4G Kills the Copper Plant


 


Verizon and AT&T are making the case that either high speed fixed line broadband or 4G should be a universal service instead of POTS.  I am not sure that this is really what they want.  Now, they are only making that case indirectly but it is implied in their requests.


seven


 

steve q
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steve q,
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12/5/2012 | 5:17:53 PM
re: 4G Kills the Copper Plant


I see this hope that verizon wireless is looking to change the way people use there cellphone. With the use of the 4g/lte for the  ph/data/tv. The main path to the customer home is speed and the ablity to watch hd tv for a lower price then there cable company like Comcast etc. With out the Fiber which is used by Verizon Fios ther is no hope for anything like high end data network's where those customer can use there other wireless device like cellphone and tablet. And with the AWS the two company comcast/Verizon Wireless working together to gain more cust base over it own company Verizon Fios is other bad  outlook to those cust that have Fios.

paolo.franzoi
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paolo.franzoi,
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12/5/2012 | 5:17:52 PM
re: 4G Kills the Copper Plant


 


You guys miss the point.  The only places that COLR matters is in the VERY rural areas.  Like our first DSL line that we installed that the customer was 21 MILES from the CO (remoted DSL over Fiber).  In cities and suburbs, nobody worries about getting a phone.  Running copper to a house 21 miles for 1 house costs a boatload of dollars for $25/month.


Removing COLR restrictions will not decommission copper for a LONG time and might provide other opportunities.  Now how many RESIDENCES does say XO serve?


seven


 

billy_fold
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billy_fold,
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12/5/2012 | 5:17:52 PM
re: 4G Kills the Copper Plant


I see this as a way for AT&T and Verizon to rid themselves of those pesty competitors like XO, Allied, Datapoint, Integra, Megapath, etc. who lease their copper from them.  The only ubiquitous communicatins media out there is copper.  If the big guys can get rid of copper, it will reduce their competition.  Until there is fiber to every household, the FCC would be nuts to let them drop copper.


-Billy

fgoldstein
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fgoldstein,
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12/5/2012 | 5:17:51 PM
re: 4G Kills the Copper Plant


The Bells are playing a classic game of "heads I win, tails you lose" with the public as suckers.


In the rate-of-return days, anything they spent went into the rate base, so pulling 21 miles of wire was paid for by everyone.  It was all averaged together.  The incentive was to overspend, not underspend.  Rate of return regulation still applies today to rural carriers who collect from the Universal Service Fund.  Some are truly prodigious spenders; with the feds making up the difference, states no longer supervise them the way they once did.


When the big telcos went to price caps, they no longer had an incentive to spend, so investment fell off a cliff.  They got to keep their rates, but they wanted to average down their costs. So they haven't invested, and in some cases they sold off high-cost territories to rate-of-return carriers or, in Verizon's case, to smaller carriers who thought they could make it work.


The FCC's plan for reducing USF costs involves more, not less, averaging; they want to merge some rural (subsidized) areas with more urban areas owned by the same parent company.  Thus only the true independent rurals would collect much.


Getting rid of COLR is how the price cap (big) carriers plan to further lower their average cost.  They're basically reneging on the original deal that freed them from rate of return regulation.

joset01
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joset01,
User Rank: Light Beer
12/5/2012 | 5:17:49 PM
re: 4G Kills the Copper Plant


So could smaller carriers step in and fill the role? Seems like that from a pure CLOR perspective you'd prefer a bigger carrier there but does that mean that smaller players couldn't do it? Or would they even want to?

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:17:48 PM
re: 4G Kills the Copper Plant


Dan,


Carol didn't mention it but some of the small carriers that are not muni owned have done CLECing like that in ajoining RBOC properties.  The challenge is that nobody wants to pick up COLR responsibility.


I disagree with Carol in part of her statement.  The FCC can force things.  It has chosen not to.  The way to do it is quite simple.  Make Broadband (with minimum bandwidths TBD) a Universal Service as the responsibility of the COLR.  Let it be delivered any way desired but make it available.  I agree that incentives will not get there...but the stick instead of the carrot will.


Now what I read in Dan's story (and maybe it is my reading) was not the abandonment of COLR responsibility but a choice in how it is delivered.  Here is what I can say, there is one (yes 1) company that is still working on Digital Loop Carriers that have RBOC approval and it is HQed in Chicago and starts with the letter T.  Alcatel has completely closed up the Litespan shop and the rest of the approved products are gone (No more SLC5 or AccessNode).  I assumed this was a move to allow the companies the idea of NOT getting another DLC approved just in case the plug is pulled on that last pair of products (the old Marconi DLC is still technically approved in the fBLS territories).  Given that the last RBOC DLC RFP was issued by Bell Atlantic that ought to give you some idea of the age of the technology involved.  Ever try to source new (stress on the new) 5E or DMS100 Line bays?  Imagine what happens when housing really starts moving again.


seven


 

Carol Wilson
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Carol Wilson,
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12/5/2012 | 5:17:48 PM
re: 4G Kills the Copper Plant


Smaller carriers have already done a better job of providing broadband to rural areas than the big guys - that's why the bulk of ConnectAmerica funds were targeting AT&T, Verizon and the big guys, at least in the first round. Because under the FCC's Broadband Plan, only those areas without broadband were to receive funding -- that was considered the most efficient way to use federal dollars to boost broadband penetration.


But the CA first round funds only pay $755 per home passed to deliver broadband and the carriers say that's not enough. So they are willing to walk away rather than accept the funding and the responsibility of providing service.


What Verizon and AT&T are doing is what they always do - putting their investors first. Funding wireline broadband in rural areas just isn't good business for reasons that brookseven points out. And no amount of policy manipulation by the FCC is likely to change that.


This is a battle that will likely be fought at the state level. Verizon is already fighting it there, as Dan's story points out, and winning. There is major change yet to come, but the wheels are definitely in motion.

e2mbcorp
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e2mbcorp,
User Rank: Light Beer
12/5/2012 | 5:17:38 PM
re: 4G Kills the Copper Plant


Correct me if I'm wrong, but my understanding is that POTS is the CO switch driven service that runs on the copper plant.  And while the twisted pairs that connect to that switch could never carry the 5Gb coax speed, it remains to be seen how much of the old copper wire speed could actually be achieved if the CO switch could be converted into a "dumb" hub, and if the copper pairs could be repurposed to build a distributed IP switch network that is controlled by the edge devices that attach to it.  That's what was meant by mirroring a cable TV architecture which is controlled by set top boxes (DOCSIS modems) at the edge which are attached to broadcast hubs.  However, in this case, the high performance MAC could provision synchronous and asynchronous flows simultaneously, and giving TCP/IP a much better road to run on than could ever be afforded by DSLAMs.  This would allow for a theoretically infinite number of channels and users at a low fixed overhead, with the only limitation being the physical bandwidth.  As to the SNR, if the copper is clean enough for DSL, I'd imagine it's good enough for DSL on steroids...because if not, then it just seems a shame to have all that copper in the ground be of no use.  Bottom line: it would be very cool if instead of 4G killing the copper plant, an elegant network protocol could resurrect it.

e2mbcorp
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e2mbcorp,
User Rank: Light Beer
12/5/2012 | 5:17:38 PM
re: 4G Kills the Copper Plant


The matter isn't if 4G can kill copper.  The matter is is 4G can move the big needle of media consumption away from the set top box...and until 4G can run on top of a broadcast architecture with a migration path for legacy devices, the answer is: unlikely.


What copper needs is a layer 2 protocol upgrade so that TCP/IP can be carried natively and without asynchronous hardware.  Once middle hardware in the form of switch routers can be eliminated, then the copper signaling (and wireless 4G for that matter) will mirror a cable/sat TV network architecture.  Further, where there is already perfectly good copper in the ground which can still carry voltage, there will be no reason to run fiber to the home.


So all we need is a near-perfect universal MAC that requires little to no change at layer 2.5 or above.  At this point, it's a fully drawn spec that could serve terrestrial or wireless...but we need engineers for C code (with knowledge of deeply embedded systems and some assembly language for debugging). 


Interested?

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