Iowa independent telephone companies facing technology shift

FCC rules mean maintaining 20th century landlines while upgrading to 21st century technology

The head end of South Slope's old room-sized analog switch in North Liberty. The equipment is being replaced with a digi
The head end of South Slope's old room-sized analog switch in North Liberty. The equipment is being replaced with a digital meta switch, which fits in part of a server rack. South Slope and other Iowa independent telephone companies are facing a shift from copper landline to Internet-based technology. (Brian Ray/The Gazette)

A newly formed federal task force is considering sweeping changes to the nation's telecommunications rules that could have a significant effect on Iowa's rural telephone companies.

The Technology Transitions Policy Task Force, which held its first meeting in early March in Washington, D.C., is reviewing thousands of pages of Federal Communications Commission regulations and rules —  many dating back to 1934. The commission will determine what needs to be adapted or eliminated to bring the nation's legacy telephone industry fully into the Internet age.

Less than 30 percent of American homes and businesses continue to rely on traditional wireline telephone service as cheaper and more diverse services are offered by cable companies as well as dozens of Internet-based providers such as  Skype, Google and Vonage.

Justyn Miller, chief executive officer of South Slope Cooperative Communications in North Liberty, said his organization is forced by FCC rules and regulations to maintain 20th century landlines while upgrading to 21st century technology.

"We're having to maintain it because that's the way the FCC has determined its mechanisms," Miller said. "We report how many landlines we have, and the landlines we have today are different than what a voice-over Internet protocol (VoIP) would be.

"Those are two separate categories even though they transport the same product, which is voice, at the end of the day."

Miller said a majority of the Iowa's independent telephone companies are still required by the FCC to provide a landline along with the Internet to each customer.

"If they don't provide a landline, they are required to charge a higher price for the Internet," Miller said. "The rules were written to make sure that landlines existed across the United States."

Phone companies in Texas, North Carolina, Florida and Wisconsin have convinced state lawmakers to remove the  generations-old requirement to provide residential landline telephone service.

While not seeking to overturn the so-called "carrier of last resort" obligation in Iowa, South Slope and other independent telephone companies want to have the federal regulations updated to include broadband Internet connections, Miller said.

"Broadband is what everybody wants, and they want to be able to transport voice by way of a VoIP connection," Miller said. "We are moving ahead with the transition to digital switching and other upgrades."

South Slope serves Amana, Ely, Fairfax, Newhall, North Liberty, Norway, Oxford, Solon, Shueyville, Tiffin, Watkins, Walford, west and south Cedar Rapids, and portions of Coralville. The cooperative was a pioneer in running fiber-optic cable to homes and businesses, enabling it to provide faster Internet speeds and a broader range of services.

In remarks delivered at the initial session of the Technology Transitions Policy Task Force, FCC Commissioner Ajit Pai said the copper-wire networks operated by monopoly telecommunications providers are literally becoming history.

"Through millions of individual choices, consumers are sending a clear message about the superiority of Internet Protocol-enabled networks," Pai said. "Voice over IP service, by contrast, is on the rise. In 2011, there were almost 37 million VoIP subscriptions in the United States.

"We at the FCC should do what we can to accelerate this transition."

While contending that regulators must ensure vital consumer protections remain in place, Pai said the commission "must make clear that obsolete 20th century economic regulation will not be imported into the Internet protocol world.

"To do that, we have to repeal the obsolete rules that were designed for the networks of yesteryear," Pai said.

Sheila Navis, executive director of the Des Moines-based Iowa Rural Independent Telephone Association, said there are serious issues to consider in moving from the traditional public switched network to an Internet-based system.

"To run a mile of fiber costs about $15,000," Navis said. "If you're up in the mountains, it's going to cost you more.

"You're also going to be dealing with the issues of call quality and reliability. With the public switched network, it was always reliable because it was really good stuff.

"Yes, it takes a lot to support the public switched network, but moving to an Internet protocol-based world is not the silver bullet that its supporters claim. There's going to be a big tradeoff."

If the FCC does take steps to accelerate the transition from the traditional public switched network to an Internet protocol-based system, Miller said it must give telephone companies time to adjust their business plans.

"We base our business plans on anticipated revenue five years out," Miller said. "We can't change a $60 million business plan overnight."

Miller said the switch to an IP-based system will not require customers to replace equipment already in use in their homes.

"South Slope consumers can't tell when we're using a VoIP switch or a VoIP trunk," Miller said. "The landline call and the VoIP call is transmitted over the same equipment. Nothing changes at the consumer's location."All of our technology is built into the fiber node on the side of a home or in a field." 

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