September 13, 2014 Jessica Sims
AT&T to End Analog Landline Phone Services?

AT&T to End Analog Landline Phone Services?

AT&T has long since been associated with telephones, and thus it may come as a bit of a surprise that the telecom giant wrote a letter to the FCC asking for permission to phase out their analog landline service.  In the letter, AT&T refers to POTS (plain old telephone service) and PSTN (public switched telephone network) as “relics of a by gone era” and it is easy to understand why; Digital telephone service is almost assuredly the way of the future.  AT&T already offers digital telephone service in many areas, as well as a highly-integrated digital telephone service that it bundles with its U-verse system.  This certainly begs several questions.

The first of which is, what does AT&T plan to do?  Obviously AT&T has no interest in abandoning droves of loyal consumers, as the market is far too competitive to pass up monthly revenues from millions of customers.  It would seem likely that AT&T would be compelled to offer digital telephone service to these same businesses, households, and organizations at a comparable rate, but what does that change mean for AT&T?  What does it mean for consumers?  These are all very good questions.

Change is Good for AT&T

Anyone who has ever owned an older car for any length of time has probably learned two things: 1) older cars break down more frequently as they age and 2) finding parts for older cars becomes more difficult and expensive over time.  This is a fitting analogy for AT&T’s investment in older analog devices that service PTSNs.  Additionally, finding personnel capable of managing these aging systems is becoming harder, thus driving up the premium that AT&T has to pay for their services.  In short, maintaining and connecting two separate networks, one based on digital packet switching technologies and the other a PTSN, is a very expensive proposition that also comes with a handful of serious technical limitations.

Adding to AT&T’s network woes, the U.S. Congress has set a goal of universal broadband access, which is very difficult for telecom giants to provide because of technical restrictions that arise from mixing digital and analog technologies.  The size and age of AT&T’s network certainly works against it in this regard.  Many consumers who have signed up for DSL services know that wiring plays a major role in determining which, if any, DSL services are available at a given location.  While telecoms have made massive improvements in DSL availability in the last decade, the fact is that not all areas can be serviced in a cost-effect manner.  While it is easy to grumble and moan about how much money telecoms make, they are publicly traded companies with an obligation to their shareholders to behave in a fiscally responsible manner.  This fiscal responsibility remains a primary concern even if it means that they forsake low-income areas and/or regions with low population densities.  After all, it is only pertinent to wonder when will their initial investment be returned to the company and shareholders in such a situation.

It is also worth noting that profits from POTS have been declining steadily since the start of the new millennium.  In 2000, POTS systems in America generated a staggering $178.6 billion in total revenue, but only managed to eek out $130.8 billion in 2007.  Factoring in depreciation of the U.S. Dollar, that is underwhelming.  Of course, AT&T would probably be able to offer its U-verse service to countless new consumers, and that would certainly help improve their bottom line despite their renewed emphasis on their wireless services over their other offerings.

When AT&T Wins, Consumers Win Too

On the other hand, what would happen if AT&T were to go digital across the board?  The first thing that would probably happen is that AT&T would be freed from having to maintain analog/digital bridges and components and rely on a 100% digital network.  This has many advantages, including greater DSL penetration at lower prices o AT&T.  Lower prices means that AT&T would be able to extend service to new portions of existing markets at a rate hat is far more reasonable.  The net result is greater broadband penetration, which is always a good thing, and possibly more consumers being able to access new services such as AT&T’s U-verse.

Broadband access is critically important to the future of America in much the same way that computers were only a generation ago.  Falling further behind in the broadband race is simply not an option, but AT&T is essentially stuck between a rock and the proverbial hard place.  If the FCC approves AT&T’s request, then the telecom giant will have to invest a fair sum of money upgrading its network almost immediately.  This could spur temporary job growth, which might be ideally timed given the economy crisis that grips America at this time.  If the FCC denies the request, then AT&T will need to make far more expensive and longer-reaching plans to continue to maintain and integrate their two separate networks.  This too could keep many Americans gainfully employed, but it might not make investors happy, and will certainly hurt millions of American families and businesses that will be left behind or at the mercy of only a single broadband provider.

What About Subsidies?

Another hurdle is the FCC’s Universal Service Fund (USF), which subsidizes the services receive by millions of old POTS/PSTN subscribers.  The rules governing the USF need to be overhauled in order for these subsidies to be paid for digital telephone services, which were viewed as a luxury only a few years ago.  If the FCC is truly serious about universal broadband, it will need to ensure a level playing field that does not penalize telecoms for updating their network infrastructure.

AT&T’s Long Game = Fiber?

An old Chinese proverb states that there are many ways to move forward, but only one way to stand still.  Assuming that the FCC does allow AT&T to move forward and consolidate their network, what will the future bring?  Fiber optics might be the answer, as competitors such as Verizon have repeatedly demonstrated that they can increase the performance of existing fiber optic systems at prices only a slender fraction of what it would cost for a comparable upgrade to even an all-digital wired network.  Verizon makes for a great example of where AT&T might go as both companies offer similar all-digital offerings that include digital telephone service, digital cable, and ultra-fast broadband.  AT&T already has an extensive fiber optic backbone in place, and may opt to make the transition to fiber optics gradually in the future without needing to maintain two networks as it does now.

10 comments on “AT&T to End Analog Landline Phone Services?”

  1. Jim C. says:

    The problem with power outages and/or the Internet crashing seems like a big downside that’s being hastily ignored, unless they have some big improvement in the works. VoIP isn’t exactly rock solid in my experience (Skype has been known to crash more than once). It just seems to add a big layer of complexity, plus the potential to overloaded Internet bandwidth.

  2. Gayle says:

    My husband uses a CapTel analog Closed Captioned telephone…AT&T is the only company offering analog. Does anyone know of other companies offering analog?

  3. Doc says:

    Jim C. is right. Having the analog land line is the last backup for emergencies.

    Besides, some equipment, like my Fax machine, will only work with an analog telephone line.

    POTS is not a relic; it’s a technology that has withstood the test of time – a hundred years worth.

    • jin says:

      You are correct. There is a great article in AARP explaining the importance to not ditch the landline, especially for seniors in the event of emergency. The call from landline is much quicker than via digital or cell. The digital and cell phones do not reach 911 quickly enough. This causes a delay in how quickly one is connected to the operator or police. Seconds and minute delays can be the difference between life and death.

      This upsets me because one is forced instead of having a choice, whether it being wanting landline or digital, or even with Television, me personally, I was happy with the way TV was rather than what it has become with Cable. It seems more like dictatorship

  4. JB says:

    Growing up, I was always taught “don’t put all of your eggs in one basket”. That is precisely what our country seems to be doing…in regards to just about everything. Nearly all of the “manual” backup systems for just about every process imaginable have been disregarded, unplugged, obsoleted. POTS (plain old telephone service) or the old, dependable, analog “Ma Bell” service is still very much needed in many regards, particularly in the area of emergency backup. How many of us have been through a disaster, such as a hurricane? I know of numerous events where cable TV, internet service, electricity, and cellular telephone service have all been down…and old Ma Bell was still kicking! Food for thought: how many times have you tried to buy gasoline or groceries during a thunderstorm or brief power outage? That’s right, you can’t — satellite communication is interrupted…sometimes for an extended period of time. Let’s keep old Ma Bell — she’s a great friend to have!!

  5. Mr. J says:

    Of course a tech upgrade for the POTS phone system is due. It’s overdue. It can be built to be semi-power-independent, just like POTS service is. (Local equipment in the loop operates on a UPS/battery backup system with considerable sustainment reserves.) Current telephone services (and especially caller ID) are easy to intercept and spoof, and if there is one thing I want to see, it is to see the door slammed in the face of those who spoof their caller ID information in order to facilitiate making scam calls. (This is Rachel from cardholder services and I know you want to shoot me in the head right now. Too bd you can’t find me. Press 1 to talk to a live operator who will scam you into the poorhouse.) While I’m fantasizing, I also would like to see the email protocols upgrades so that emails are difficult (I can’t say impossible, as there’s always a better hacker out there somewhere) to forge.

  6. Linda Chapman says:

    I just received a call from AT&T telling me that they need to upgrade my analog service to digital at my very small business. I currently pay about $50 a month for one phone line, no computer, nothing else for the $35.00 phone I use that is probably 5 years old. I asked what the charge was for the new modem he said they would have to install, and he said it would be $90.00. After asking how that would be billed he said I misunderstood my bill would now be $90 a month. What am I paying for? In 5 years with going from $50 to the new bill of $90, I will have paid $2700 for the modem. What are my options?

  7. Joann says:

    After being told of this great bundling package (digital home phone, internet and television), I switched from POTS to all digital about a year ago. After about 6-months, my television picture would freeze, followed by lost of the internet which eventually led to a phone without a dial tone. After about 15-minutes, the gateway would began rebooting itself and everything would eventually return to normal. However, this kept occurring every other day and it slowly became a daily problem. Since September of 2014, 9 AT&T technicians have been to my home. After the 3rd technician, the TV and internet stopped freezing. However, I constantly kept having problems with the home digital phone service. Every time I lost my phone dial tone, my home alarm monitoring service also became inactive. After the 8th technician, I requested to return to POTS. It took 2 technicians to complete the change. It has not been a week since that happened, January, 2015, so I still don’t know how well the work the technician did will continue to work. Going completely digital may be a good idea but AT&T needs to make sure that have gotten the kinks out prior to offering it entirely to customers.

  8. Hugo Ahlquist says:

    We had a tornado in our neighborhood 9 years ago last week. When our ears were popping as we huddled in the basement, I was on the POTS line checking in with our kids. The POTS line was our lifeline as it never faltered even though power was out for a full week and Comcast cable Internet was out for 10 days. You need both of those for a VOIP phone to work. Cell phone service was seriously degraded because of damage to the cell towers so that was of marginal use. In other words, a usable cell signal was about a block away from the house. The POTS line was our Internet life-line, too as I still had a dialup number I could log in with.

    Our security system is connected to our POTS line, but the alarm company is telling us that, within two years, the AT&T POTS lines will be discontinued so they are trying to sell us a cell phone system and charge an additional $12 per month for the service. Ugh!

    I would like to say that they can pry my POTS lines from my cold dead hands, but, of course, all they have to do is pull the plug at the Central Office.

    I get ads all the time from AT&T to switch to Uverse. When I ask about the power loss scenario, they tell me the VOIP box has a battery backup. I ask how long it is good for and they reply 8 hours…. not 8 days. I’m not a happy camper about being forced to give up functionality and reliability.

  9. Russell says:

    The Landline is the most dependable phone service during hurricanes, tornadoes and any other devastating weather scenario. Therefore, to ensure the greatest measure of public security, landlines should offered by all telephone companies. If this means sharing the cost to provide and maintain the lines with AT&T or another telephone company offering landlines. The alternative is unacceptable: less or no security during disasters.

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