A plan telecom giant AT&T pitched to the Federal Communications Commission (FCC) in November to shift from old landline networks to Internet-only communications could dramatically change federal regulations of telecom services, leading activists warned Raw Story this week.

"Beginning around 2005, the FCC made a clear distinction between telecommunications like voice... and what they called information services, which is a general catch-all for anything IP (Internet protocol) related," Benjamin Lennett, policy director for the Open Technology Institute at the New America Foundation, explained to Raw Story. "It is regulated separately from telecommunications, which has historical regulations where the FCC has very broad authority. There is not specifically a congressional mandate to regulate [IP] services."

The company proposed to the FCC (PDF) that it be allowed to fully rely upon Internet protocol (IP) tech for its communications services in certain areas, saying the change is already happening because consumers are increasingly switching from landlines to smartphones. Part of their pitch would see the company implementing IP-only services in limited regions at first, which it says will help the FCC determine what sort of public regulations are needed for Internet-only communications.

"We aren’t proposing to the FCC a switch from legacy to IP networks – that is already happening, being driven by consumers," an AT&T spokesperson told Raw Story. "What we are requesting from the FCC is that they oversee this transition via geographic beta tests to see what operational, technical and policy issues that arise from this transition."

But what would happen in a regulation-free vacuum -- essentially the wild west of the communications world -- if the nation's largest telecom company is allowed to operate with impunity? So far, public officials are not asking that question because they're too busy praising AT&T's announcements of billions of dollars of investment in new wireless broadband networks, supported with funds from President Barack Obama's National Broadband Plan.

Because IP networks are regulated differently, they are not subject to rules that encourage universal access by making low-cost options available in under-served communities. The FCC also does not yet have rules for what reasonable exchange costs are with Internet-based communications.

Rules governing the networks that make landlines work prevent AT&T from telling smaller companies that connection exchange rates will suddenly double or triple for calls coming onto AT&T's network. Without such regulation, AT&T could run an abusive monopoly with these exchange charges, leaving smaller carriers with no choice but to pay up and pass costs onto consumers. This means AT&T's plan has the potential to drive up prices and drive down competition.

Movie streaming service Netflix experienced the pinch of a similar tactic employed by Comcast in 2010, when the company erected what amounts to an online toll booth for connections coming from a Netflix partner company called Level 3 Communications. Level 3 passed the cost on to Netflix, and Netflix ultimately raised its subscription price.

Smaller telephone and wireless data companies that buy access to infrastructure built by AT&T could be facing that same scenario if landline networks go away and the FCC fails to regulate IP networks in a similar fashion.

S. Derek Turner, research director for media advocacy group Free Press, told Raw Story that it could result in hardwired phone lines being ripped out of poor or rural communities in exchange for more costly cellular and mobile data service, or even telecom blackouts over exchange rate disputes similar to the occasional brinksmanship between cable operators and content providers.

Added, there's the additional concern of reliability in the aftermath of a natural disaster or during civil unrest -- IP networks have historically failed in these situations either due to damage or human intervention, whereas wired lines were still operable. That raises the real potential that a small, rural community could be completely cut off communications in a disaster scenario.

Harold Feld with Public Knowledge raised this very concern after AT&T made its filing in November, recalling stories of New Yorkers without power after Hurricane Sandy "combing their neighborhoods for payphones – which continued to operate because they connect through independently powered copper networks."

"What happens in 22 states when that older, more expensive but more reliable technology is replaced with better, faster but more fragile technology?" he asked.

Still, the biggest concern is that "a lot of the protections we take for granted in telecoms, that were fought over for a long time... will go away," Lennett said. "The basic intention for AT&T is to remove the copper and replace it with wireless... The long history of fighting with the AT&T monopoly that created the necessity for an interconnected nationwide network would just essentially go away."

Despite the potential for abusive practices in the private sector, there is some hope that the FCC will see the light. The Washington Post reported in February that FCC Chairman Julius Genachowski has a plan to blanket the country with wireless Internet access, then make a basic level of service free to the public. Such a scenario could set up a radical explosion in competition in the communications market, lowering prices for consumers and forever changing the way the things we buy interact with the Internet.

Whether Genachowski's vision will become a reality remains to be seen. AT&T's plan, on the other hand, is already well on its way.


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