Michigan SB636 passed, allowing termination of landline phone service. Now what?

“Mr. Speaker and members of the House:

Today a disservice was done to the citizens of the State of Michigan. This bill hampers competition and allows a greedy large corporation to take advantage of some of the most vulnerable segments of our population. Senior citizens and lower income users deserve to be protected. In this case, they are not. I hope that in future votes my colleagues will take into consideration the long term effects of legislation that we pass.”

– Rep. LaVoy, Michigan House Journal 27 of 2014

On 3/11/2014, Senate Bill 636, as amended, was passed in the State House of Representatives of Michigan. For my post on the original bill, click here. (Please note there is an important amendment I'll be discussing below.)

Not all is lost. Numerous news reports (many of them sympathetic to AT&T's position, but it raised attention regardless), 19,000+ hits to this blog, attention from many other blogs and websites, and  outcry from numerous public safety, consumers rights groups, and competitive providers managed to hold off this law for almost 3 months. In that time, something that passed the state Senate in 2 days with a final vote of 31 yeas, 4 nays, 2 excused, and 1 abstain ended up passing the state House in nearly 90 days, with 71 Yeas and 39 nays, and only after being amended.

What was the amendment, and what does it do? Are we safe?

It adds onto the section that allows a provider to withdraw as a telephone company entirely (as long as there was a workable solution for 911 emergency calling in the area),  a section binding the withdrawing carrier to the FCC IP Transition order, should they choose to withdraw.  (This would apply whether it's a formal FCC IP Transition trial or not, until federal regulations are passed codifying the IP transition nationwide, which would likely supersede any state laws we have on the topic anyway, so we're only losing so much here)

Regulation of interconnection, wholesale access, and consumer issues would remain the purview of the MPSC, using the FCC IP Transition trial rules until the FCC passes its own final rules for the IP transition.

Have no illusions – this isn't the best case scenario for Michigan consumers, or competitive providers. But it's much better for them than the original SB636. The FCC IP transition order provides some consumer protection (but not a lot) by requiring applicants to prepare reports on the impact of transition for many different types of things, such as credit card terminals, heart monitors, etc. And it allows wholesale access to legacy network elements, so competitive providers could decide to provide legacy TDM/POTS equivalent service if there is market demand for it (and obviously in many places, there would be).

What it doesn't do is compel the RBOC/ILEC to provide those legacy TDM/POTS equivalent services. The upside for consumers is that there are carriers who would happily take that business from the ILEC (including the carrier I work for), and theoretically anyway, we'd be able to do so using our own equipment and the ILEC's wires.

The downside is, many subsidies would not be available to provide same, and CLECs don't necessarily have the sunk cost to provide this service cheaply (some do, in some areas). This could have a disproportionate impact on low-income families and rural customers, where there are fewer customers (or mostly low income customers who are paying the bare minimum the plans would offer) to subsidize a network build to provide a replacement product.

The FCC IP trials state there has to be protection of low-income/elderly/disabled customers, but I'm not certain what that would ultimately mean. Where are the cutoffs for low-income and elderly? What kind of price increases would be okay?

Smarter people than I have summarized the IP trial orders here.

The bill, because of the amendments, has to go back to the senate, where it is expected to be passed immediately, and the governor is expected to sign it. Rumors say that the governor pushed hard for these changes, as he did not want the original bill to be passed as written – nobody wants to be the governor that took away phones from elderly people, and gave away state level oversight of the largest public utilities in their state. Well, at least no governor with common sense, anyway.

Time will tell if these changes are enough to protect everyone. I'm not sure anyone with experience in the industry can tell you at this point where things will be by 2017 on these issues. It's notable that the Michigan IP transition laws would kick in right after the current presidential administration term limits out, and a new administration will take its place roughly 20 days after the law kicks in. Part of me can't help but think that AT&T will have their claws dug deeply into the backs of the nominees of both parties.

So is this the end? Are we screwed now?

No. Though many of these issues move to various other states, and the federal level. (AT&T often uses Michigan as a model for legislation in other places – HB4314 was used to prove that if similar legislation was passed in other states, they too would benefit from increased deployment of AT&T's U-Verse product, for example, and from increased investment in their state. AT&T expanded U-Verse deployment, and located more employees in Michigan as a reward for passing HB4314)

Additionally, with Network Neutrality changes, broadband data caps, and the consolidation of major industry players any ability to offer services over the broadband connection of a third party (such as Vonage, Aereo, Skype, Youtube, Hulu, and Netflix) is severely threatened. More independent carriers would let the free market figure out network neutrality, but with consolidation and things like SB636 (at least in its original incarnation, though we don't know what this new incarnation will really bring for certain) we impact the ability for new entrants to create proper competitive pressure. (Each of those links contains more information, and on most, an opportunity to voice your opinion).

As for the FCC's IP Transition policies, you still have an opportunity to lend your voice. DoctorOhhnoes points out in an earlier post that there is still an opportunity to comment on the transition with the FCC.

Numerous groups are working on things such as privacy from the NSA, SOPA censorship, overreaching copyright law, broadband data caps and lots of other things.

What would solve this entirely?

In short, what they call "Structural Separation" – this is when companies are split up between the side that maintains the outside plant infrastructure, and the company that provides voice and data services. The outside plant company would only care what customer belongs to whom as a technical necessity (ie: Where does this customer's wire, fiber optic cable, etc get hooked to in the central office? To AT&T's switch, or to another carrier?). They would own all the buildings, structures, and wires.

This company would be legally separate from any company providing data or voice services, much like AT&T long distance was broken off from the Bell system in 1984, but in this case we're taking it a step further – separating phone companies from the outside wires. AT&T would pay rent to be in the buildings under the same terms and conditions that competing carriers do, and be subject to the same outside plant conditions that the other carriers would.

Any improvements to the outside plant would be cost averaged across the combined customer base, and would affect all carriers equally. AT&T wouldn't benefit unduly from having a large embedded base (except from the usual economies of scale with billing, support, IP transport, and telephone service), and any carrier could roll out any technically possible service at any time.

The outside plant company would have an incentive to come up with better quality loops, better fiber optic penetration, better everything because carriers would demand that of them (and would work out a way to pay for it collectively, if necessary), and they would all benefit equally from the deployment. The outside plant company may even come up with better products to offer – for example, a wholesale VDSL2 DSLAM setup in the neighborhoods that any carrier could pay to use with their equipment to extend the reach. This would allow nearly any carrier to roll out a U-Verse like service overnight. Economies of scale would be spread across all market participants – Currently if 4 companies in a business park want service from 4 different carriers, each has to run their own fiber to the customer's building all the way back to a central point. A structural separated provider could run one 48 count cable to the business park, and hand all 4 carriers their own set of strands to each building. If a customer wanted to change carriers, or add a second, they'd be able to hook up unused capacity, or even swap a cable over from one carrier to another in the central office. This means the entire business park could benefit from that scale, and bringing the other buildings into the fold would be simplified, no matter what carrier they want to use.

It may sound utopian, but several countries are doing this today.

Imagine if your house had access to fiber optic services from 4-6 companies. Do you think people would still be talking about net neutrality and bandwidth caps? Heck no, because if one of those carriers sold capless products that worked well with everything, people could switch in a heartbeat to them. There's no sunk costs and no startup time. The company that tried to limit their customers unnecessarily would be out of business in a heartbeat.

TL;DR

Too much to read? Summary: AT&T managed to get their bill passed with some change due to consumer and citizen outcry. The changes are good, but not as good as not having the law at all.

While the future is uncertain, you still have influence, and there are many battles other than this one that can have similar impact on you, no matter who you buy your services through. I strongly urge you to weigh in on them with those who are in power (and many of them are actually listening, as this isn't a particularly partisan issue, and affects everyone!). I strongly urge people to pressure their legislators, and their friends, to become educated on the topics I mentioned above, and to push people to have positions on them, much like people do about things like abortion, gun control, social security, and other stuff. Almost everyone in the US uses a telephone or the internet daily, and what happens to these services matters a lot.

And if you haven't seen what the other side is capable of, I strongly suggest checking out my earlier post about AT&T's involvement with Astroturf groups here. Other sites discuss this in greater detail.

And to steal a line from Dr Seuss: “Unless someone like you cares a whole awful lot, Nothing is going to get better. It's not.”

2 thoughts on “Michigan SB636 passed, allowing termination of landline phone service. Now what?”

  1. Thanks again for giving me a mention here. As someone who's only slightly familiar with regulatory things in telecom, this is actually pretty interesting to watch. Here's what my understanding of it is:

    The independent carriers seem to be rooting for a more traditional model with fewer regulatory changes – or none in some cases. The incumbent carriers' stance is, well, obvious. They're both actively fighting each other and telling the FCC not to listen to the other proposal in their statements. Then there's TURN, CPE companies, and individual people, who just don't want to see their landlines disconnected/neutered. In all of this, there's also the CLECs, who've aside from Earthlink, made an attempt to look at AT&T's confidential petition, and have otherwise maintained a deafening silence.

    The endless tug of war we're seeing between organizations with different interests reminds me a lot of watching the NBN disaster unfold. Different circumstances, but sometimes I wonder how long it'll be until AT&T pulls a Telstra and completely flips their stance.

    http://www.zdnet.com/au/copper-network-not-ageing-telstra-7000023286/ if you're not familiar; this was after Telstra previously stopped maintaining their outside plant, and pretty much said publicly it's a lost cause.

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