Some phone companies seek to end landline service

• Experts say Internet-based service is faster%2C higher-quality
• Only 9.4%25 of households remain landline-only%2C CDC says
• Advocates urge cautious approach to regulations

DES MOINES, Iowa -- As more telephone customers cut the cord and shift service to wireless or Internet-based options, some major telephone companies have asked the federal government to pull the plug on the old-fashioned service.

They say regulations that require maintenance of outdated, little-used infrastructure hinders progress because it ties up money that could otherwise be invested in technology upgrades. But some small companies question the motivation behind the push, saying it is likely a self-serving effort to allow those major companies to run wild in a relatively new, far-less-regulated Internet-based telephone environment.

"They are not making any moves out of generosity or trying to improve technology for the world," said Dave Weis, owner of Internet Solver, a telephone, Internet and managed IT provider. "They are trying to sidestep rules and laws that govern what portion of their network they are required to lease to competitive carriers like us."

Experts say Internet-based telephone will mean faster and higher-quality service for consumers. Former Virginia Congressman Rick Boucher, who visited Des Moines this month to talk about the future of the Internet, said the conversation must now turn toward ensuring that any transition for residents is smooth and that factors such as cost and availability are equitable and fair.

During his visit, Boucher mentioned an advisory committee's recommendation that the Federal Communications Commission phase out traditional phone service, known as the public switched telephone network, by 2018.

That system has been in use since the introduction of phone service in the U.S., meaning decades of regulations have been worked into the network. However, many people have gone wireless or are using Internet-based phone service, which has fewer regulations.

Weis acknowledged the trend but said there remain many holdouts who still use traditional service.

"There has been a constant move away from landline telephone service during the last decade," said Weis, who keeps his traditional phone in case of emergencies. "Still, a lot of people for a variety of reasons want to keep a landline."

But the percentage of those people has quickly dwindled.

The Centers for Disease Control and Prevention, which twice a year tracks the percentage of households that still use landlines, reported in December that 35.8% of U.S. households have gone wireless-only, a 77.2% bump over late 2008. In addition, 9.4% of households remain landline-only, a decrease of roughly 46 percent during that same period.

The same study showed that 52.5% of households have both wireless and landline service, although it did not specify whether those lines were traditional or Internet-based lines. As those numbers shift, industry officials say it's only natural that the regulations shift as well.

"It's not so much that the network is going away," said John Stineman of Heartland Technology Alliance. "We'd be changing the regulatory structure to be oriented more toward broadband. It's a migration that is already taking place."

Stineman, whose agency hosted Boucher's visit, said bringing holdouts along quickly will help telephone companies save money because they will no longer have to maintain the aging infrastructure of the old-fashioned telephone service.

"There are generational or economic reasons for holdouts," he said. "Or some people just want to live off the grid. For those folks, we have to find a way to move them to the future. As broadband prices decrease, we have to help them understand what more they can do with it or even that there are so many options."

It is not just the big telephone companies that have to deal with infrastructure maintenance. Rural telephone companies have run into that obstacle as they try to modernize services with broadband and fiber optic infrastructure.

Although advocates understand Internet-based telephony is the future, they want to approach regulations cautiously.

"We want to do it in a way that leaves a level playing field," said Joe Hrdlicka, Iowa Telecommunications Association's director of government relations. "We don't want to end up in a situation where there are regulatory haves and have-nots."

Hrdlicka's group has a task force monitoring a series of potential regulations, including one that would phase out access charges, which allow companies to collect fees from other carriers to transport calls and data over their networks. That mechanism was created by the Telecommunications Act of 1996 and serves as one of rural telephone companies' three main sources of revenue.

But Boucher said the loss of those fees could be alleviated by removing the regulations that require maintenance of old-fashioned telephone networks. It's part of a complicated maze of regulations either in the works or being proposed that could change the way telephone companies and services work within the next few years.

Companies such as AT&T maintain 100% of their old infrastructure for the now-25% of their previous customer base that use it. So it's not surprising that industry heavyweights and small companies alike feel they have a stake in the matter.

AT&T recently petitioned the FCC to make sure all consumers are brought along fairly. Boucher said the time has come to specify exactly what that means.

"There has to be some way to bring everybody together," Boucher said. "The petition acknowledges the need to leave no one behind. It's time to put some flesh on those bones by saying anyone in the transition must be provided a service at least as well as they have today."