The United States Telecom Association (USTC) delivered a very clear statement to the Federal Communications Commission (FCC (News - Alert)) yesterday, encouraging them to say publicly that incumbent telephone services are no longer and should no longer be treated as a monopoly.
While this would have been preposterous beyond belief even just 10 years ago, changes in the telecommunications landscape and the rise of new technologies have made it quite clear that there is no more monopoly status for phone service.
Basically, the USTA wants the FCC to make it clear that local phone service is not the market share powerhouse it once was, and react accordingly. Most homes formerly had a landline service of some sort, as it was essentially the standard for communications. The rise of mobile technology, which has made smartphones smarter and given them increased ubiquity, has taken much of the old monopoly power from landline services, because customers, given sufficient provocation, can switch at any time to a cell phone and notice little in the way of disruption.
Dominance, as an economic term, is most likely when a service has a 60 percent or better market share. While this was the case for many years with landline telephone service, the FCC's Technological Advisory Council revealed only just last year that the circuit-switched telephone network “no longer functions as a universal communications infrastructure,” and is woefully behind the capabilities offered by both wired and wireless broadband Internet.
This in turn has led to the FCC making moves to get rid of what it calls “barriers to the transformation of today's telephone networks into the all-IP broadband networks of the future.”
But along with this, says the USTA, should also come a relief from powers that the FCC commonly exercises under monopoly systems, like capped maximum rates. With telecommunications companies rapidly losing customers, they need the ability to raise prices on those that remain to make up their lost revenue and bolster investment in those all-IP broadband networks described previously.
Similar measures were recently taken for cable service, which has seen its share of the video market drop from around 95 percent to around 57 percent since the FCC's adoption of a presumption that cable was "dominant" in its field.
Now, without that presumption in place, cable can behave differently and better adapt to the changing market.
Markets change all the time. Indeed, there are a lot fewer people out there with landlines than there were before. More people are making the move to cell phone that in many cases offer service that land-line phones simply can't. Landline phones aren't the monopoly they once were; changing technology has seen to that. So continuing to treat land lines as a monopoly likely isn't a good idea.
Changing prices isn't exactly a bright idea either, especially in this economy, but it's clear that telecom companies have to be able to react to changing conditions on the ground.
This is just one of those instances for which new rules need to be made to reflect the new conditions.
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Edited by Braden Becker