A back-of-the-envelope estimate by a Georgetown University researcher suggests that telecom companies may be spending as much as $13.5 billion a year maintaining their old phone networks.
From that kind of investment, we might expect large benefits. But the reality isn't so clear, says Anna-Maria Kovacs, a visiting scholar at Georgetown's Center for Business and Public Policy. Just five percent of all American households use the old copper-wire technology exclusively, which has been around since the dawn of the telephone. Another 29 percent use both a landline telephone and a cellular phone. The other two-thirds rely on cellphones, Skype-like VoIP technology or other methods to make calls.
According to Kovacs — and the Internet Innovation Alliance, the broadband adoption group that's behind the report — this is evidence that we should deregulate the telecom industry so that it isn't required to spend so much to maintain a legacy service.
"Right now where the [phone companies] have to run both networks in parallel, there's a huge disincentive for [infrastructure] investment," she says. "And if you can move away from that system ... that can make a big difference."
In theory, once businesses are freed from the upkeep of plain old telephone service (POTS), they'll funnel that money right into new network upgrades that will benefit everybody.
But that's far from guaranteed. The companies could just as soon choose to end the traditional phone service in poorly connected communities without replacing it with something superior, as Verizon planned to do until recently in Fire Island, on New York's Long Island, where copper phone lines were ravaged by Hurricane Sandy.
Since repairing the local POTS network would have been costly there, Verizon brought in a service called Voice Link, which effectively turns a landline phone into a cellphone by sending calls over Verizon's wireless network. But within weeks, Fire Island residents revolted; the quality of the service made it nearly unusable. It took an intervention from the Federal Communications Commission for Verizon to relent and agree to install FiOS, its high-speed fiberoptic service, on the island.
To Harold Feld, senior vice president of the advocacy group Public Knowledge, what Verizon wanted to do (but didn't, in the face of regulatory and public oversight) might become a pattern if companies are allowed to abandon their POTS networks whenever and wherever they see fit.
"Instead of ditching all the old rules, we've got to think, 'What do we want to keep?'" says Feld.
Rick Boucher, a former Democratic congressman and the Internet Innovation Alliance's honorary chairman, says nobody is proposing that POTS should end overnight.
"It would be some matter of years before you had a complete transition," Boucher says.
Kovacs adds that as even more customers voluntarily leave POTS for wireless or other services in the coming years, the share of households at risk of losing phone service will shrink, too.
To test the consequences of the idea, the FCC has considered setting up a pilot program to try to move some POTS diehards off of their service. But it's not clear when a decision on that might be made.
Depending on where you sit, millions of Americans are either being short-changed because a minority of other Americans haven't gotten with the mobile program — or the minority is at risk of being taken advantage of simply because the majority views it as an expendable constituency.
Correction: The original version of this post said that Boucher was a Republican congressman. In fact, he was a Democratic congressman. The annual spend on POTS upkeep is also $13.5 billion over six years, not $16 billion over five years.