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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

AT&T Proposal To Deregulate Basic Phone Service Could Hurt Rural, Low- and Fixed-Income Kentuckians  Posted: January 24, 2013

The world of telecommunications has been changing, but the public expectation that reliable, affordable, basic phone service will be available during this digital transition should not. Access to phone service is not a privilege, but is a right secured under state law and a promise made under “common carriage” rules. Under the current framework, companies thrived in a regulated environment for decades, with a guaranteed profit on their investments in the “public switched telephone network” in return for offering basic service in a nondiscriminatory manner to all customers.

In 2006, AT&T and others successfully lobbied the General Assembly to allow telephone companies to “elect” to deregulate all services other than basic telephone service. In requiring that access to basic telephone service continue to be regulated, the General Assembly recognized that stand-alone basic telephone service is, for many Kentuckians, an essential service. AT&T may believe, as it told the FCC in 2009, that “plain-old telephone service” is a “relic of a by-gone era,” yet basic landline telephone service remains a lifeline for many Kentuckians to convey medical monitoring information, smoke and security alarms, and voice service. Basic local service is more than just “voice” service – it includes, by state law, reliable unlimited local exchange calling, 911 service, directory and operator assistance, and the ability to connect with other carriers.

AT&T is circulating a proposed bill that would deregulate basic local telephone services. What would the bill do?

Unless you currently live in a location with less than 5,000 housing units in the telephone exchange, you will no longer be guaranteed access to basic local exchange service as a stand-alone option. For those smaller exchanges, AT&T could immediately cease providing stand-alone basic landline service if it offers an “alternative voice service,” or it could petition the state Public Service Commission to be relieved of the obligation to provide basic telephone service by meeting certain criteria regarding other providers of voice service in the area. No new houses built in the service areas of AT&T, Windstream, and Cincinati Bell in the Commonwealth would have a right to a landline offering basic phone services on a stand-alone basis.

There is nothing in the draft bill that would require AT&T to seek Public Service Commission approval prior to ending the offering of stand-alone landline phone service in exchanges where it or another provider offers wireless alternative voice service. In addition, there is no requirement that AT&T demonstrate that the wireless service is of comparable reliability and consistent signal quality to the current wireline service. Deregulating basic local phone service based on the mere existence of a wireless “alternative voice service” provider that can be an affiliate, does not assure access for all customers to voice and other basic exchange services that are functionally equivalent, competitively priced, and comparable in signal quality, reliability, and range.

The AT&T website disclaimer for its “Wireless Home Phone device” speaks volumes when it acknowledges that: “[A]T&T does not represent that the Wireless Home Phone service will be equivalent to landline phone services…..Wireless Home Phone may not support your fax machine, alarm services, dial-up internet service or credit card machine.” Regarding 911 service, the AT&T disclaimer notes “911 calls are routed based on the wireless network’s automatic location technology, but you may have to provide your home address to emergency responders. AT&T recommends that you always have an alternative means of accessing 911 service from your home or business during a power or network outage.”

Before Kentucky deregulates basic phone service, and allows wireless services to be substituted for wired basic local exchange service, the PSC must be empowered to determine whether sufficient competition in the provision of the full array of reliable basic phone services is available from other carriers on a stand-alone basis in a phone exchange, and that basic reliable service will remain available to low- and fixed-income Kentuckians and those who it is more costly to serve because of their location. Otherwise, these customers will not be adequately protected in a deregulated marketplace.

AT&T has asked the Federal Communications Commission to set a date where its obligation to maintain the wired public switched telephone network (referred to as the “legacy” network) would be eliminated. As the internet-protocol based communications network expands, the FCC will determine, on a national level, the obligations of these incumbent telephone utilities to the customers in their service areas, and the obligations to provide wholesale access to other carriers and to allow interconnection with other carriers. Ending the obligation in Kentucky to provide reliable stand-alone basic phone service under state oversight, without an assurance comparable services will be available in a deregulated marketplace for those who are most in need of and least able to afford such services, is not in the public’s interest.

The adverse impact effect of allowing these utilities to replace landline with wireless phone service will not just affect residential customers, however. Any incentive on the part of the utilities to upgrade landline services to landline broadband in rural areas, and to maintain the wired network that competing local exchange companies use to reach customers, would be gone. The digital divide that already exists in access between urban and rural areas would become wider.

Reliable basic telephone service must continue to be available for those who need it on a stand-alone basis during this time of transition.

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