What is the PSTN and Why Should You Care



What Is the “PSTN” and Why Should You Care?

It appears that you can fool most of the people most of the time. AT&T has proven that if you spend a boatload of money and repeat the same deceptive statements over and over, (and have a media that just parrots the statements), the public will believe anything you want them to.

The term “Public Switched Telephone Networks” (PSTN) or the word ‘utility’ is case in point. They have come to mean ‘bad’ or “old” or other derogatory labels. Truth be told, AT&T has snookered you. – and it cost you thousands of dollars and has done economic harms to your community.

And you should care because AT&T-Verizon, with the help of the American Legislative Exchange Council – are closing down the PSTN – abandoning about ½ of America and creating new “Digital Dead Zones”—regardless of the actual facts.

And you should care because wireless services are controlled by the wires as most cell sites or Wi-Fi hot spots are connected to a wire; everything from ‘bandwidth caps’ or the cost of wireless service are controlled by the controllers of the wires.

And you should care because removing all telecom regulations impacts all services in the US, from who gets high speed service, competition for all services, including cable service or other intangible things such as net neutrality, SOPA-SIPA proposed laws or privacy or AT&T and Verizon acting as warrantless policeman.

Today, customers have more choices of toothpaste or pizza joints than they do of internet or broadband competitors.

Regardless of what you been told, the PSTN, the state-based utility, are the wires into your home or office, school or library. It should have already been upgraded to a fiber optic –very fast service; it was never supposed to remain the old copper wiring. You paid thousands of dollars for these upgrades. And it is supposed to be able to handle ALL services – broadband, Internet, or cable – phone or even VOIP service. And these services were supposed to allow any competitor to offer you service. And this wire, regardless of the current condition or technology is the Public Switched Telephone Networks, the state-based utility. Anything else you heard is a fabrication of the phone companies.

And the utility serves everyone and kept the price of service ‘fair and reasonable’ because the rural customers are averaged with the urban customers.

And the definition we just provided is based on facts, not corporate hype or the FCC allowing corporate tomfoolery or hand waiving.

1) The PSTN Was Never just “POTS” but is ALL Services Over the Wire.

This is an FCC footnote from the FCC’s Connect America fund FCC Order in 2011. The PSTN is not just phone service or “POTs”; it is all services.

“The public switched telephone network is not a single-use network. Modern network infrastructure can provide access not only to voice services, but also to data, graphics, video, and other services.”

Or the legal definition: ("public switched network" in 47 C.F.R. 20.3):

 

 “Public Switched Network. Any common carrier switched network, whether by wire or radio, including local exchange carriers, interexchange carriers, and mobile service providers that use the North American Numbering Plan in connection with the provision of switched services.”

The "PSTN" is, simply put, the many interconnected common carrier networks that use telephone numbers. It has nothing to do with the technology any of them use.

2) The PSTN Was Supposed To Be Upgraded to Fiber Optics for All Services.

New Jersey state law, still on the books in 2012, states that the PSTN was for high speed data services, broadband and video, which included cable programming.

"D. NJ BELL'S PLAN FOR AN ALTERNATIVE FORM OF REGULATION MAY 21, 1992 --- NJ Bell's plan declares that its approval by the Board would provide the foundation for NJ Bell's acceleration of an information age network in Now Jersey and referred to by NJ Bell as ‘Opportunity New Jersey’. Opportunity New Jersey would accelerate the deployment of key network technologies to make available advanced intelligent network, narrowband digital, wideband digital, and broadband digital service capabilities in the public switched network, and thereby accelerate the transformation of NJ Bell's public switched network, which today transports voiceband services (voice, facsimile and low speed data), to a public switched network, which transports video and high speed data services in addition to voiceband services."

That was 20 years ago…

3) The Entire PSTN Utility was to be Upgraded to Provide 100% of Customers with s Fiber Optic Future.

In 2012, the New Jersey Board of Public Utilities issued a show cause order to have Verizon, New Jersey explain why they had not completed 100% of the state by 2010 with a fiber optic wire that could supply 45 Mbps in both directions.

In state after state, laws were changed to rewire the PSTN, supposedly removing the old copper wiring and replacing it with fiber optic services.

• Connecticut was to spend $4.5 billion and have the state completed by 2007.

• Pennsylvania is supposed to be completed by 2015;

• California was to have 5.5 million homes completed by 2000, and spend $16 billion dollars.

While each state was different, the fact is no state was ever completed.

4) You Were Charged Thousands of Dollars for the PSTN to be Upgraded.

We estimate that by the end of 2012, now-AT&T, Verizon and Centurylink collected $360 billion dollars from changes in state and federal laws that gave (and still give) the companies billions per state—by charging customers extra on their phone bills.

The scam was simple –the companies went state to state and got laws changed that where they signed a contract that said – add extra charges to the customers’ bills and we will use the money for ‘new construction and upgrades’. Then they pocketed the money. Our report from 2002 highlighted how these excess profits ended up being used for overseas investments, executive pay and other non-construction spending.

5) What about AT&T’s U-Verse and Verizon’s FiOS? The Companies are Privatizing Publicly Funded PSTN Networks.

In 2004, after Verizon and AT&T used the promise of these new, second round of upgrades to get rid of the obligation to rent these utility PSTN wires to competitors, which was mandated by the Telecom Act of 1996 and even in state laws, AT&T and Verizon were able to create separate subsidiaries that got the utility customers to fund these new services, but most of the revenues appears to be going into other ‘non-utility’ bank accounts.

It had been a massive privatization of publicly funded networks – I.e., it appears that Verizon FiOS are not ‘new expenditures’ but the company has been using the utility construction budgets to create these ‘cable services’. AT&T has done the same thing, and their recent announcement to spend an additional $14 billion on upgrades is, again, not ‘new expenditures but mostly a restatement of the normal construction budgets – monies that were supposed to be used to upgrade the utility, PSTN plant.

6) You Were Charged Again – Maybe for Services You Will Never Get.

In our report, "Verizon's State-Based Financial Issues & Tax Losses: The Destruction of America's Telecommunications Utilities, the Public Switched Telephone Networks (PSTN)”, it is clear that there has been a wholesale dismantling of the PSTN by moving profitable assets out of the utility bucket, while dumping expenses into the utility-PSTN part of the company – and this includes everything from DSL and broadband to even wireless expenses. This dumping of expenses, combined with the companies’ affiliates not paying their fair share results in major losses for the PSTN. Verizon, New York claimed to have lost $2.2. billion dollars in just 2010, with a ‘tax benefit’ of $716 million in state and federal taxes.

Claiming losses, the Verizon went back to the regulators and got rate increases. However, AT&T and Verizon announced that they were ‘abandoning the PSTN’ – and so customers in these areas are paying rate increases for services that they will never receive.

And I need to make two things clear -- New York State agreed to let customers fund FiOS – illegally, and raised rates because of losses. New York State Department of Public Service, June 2009[1]

 

“We are always concerned about the impacts on ratepayers of any rate increase, especially in times of economic stress,” said Commission Chairman Garry Brown. “Nevertheless, there are certain increases in Verizon’s costs that have to be recognized. This is especially important given the magnitude of the company's capital investment program, including its massive deployment of fiber optics in New York.”

“Verizon's financial condition is ‘relevant’ when the Commission considers pricing changes because "the state has an interest in a viable company….There seems to be little question that the company is in need of financial relief; Verizon reported an overall intrastate return of a negative 4.89% in 2006 and its reported intrastate return on common equity was a negative 73.6%.”

The disconnect? FiOS revenues and other services are not included because of a shell game played – only regular phone lines are being counted, not the services over the wires, which can include everything from calling features to lines that have been upgraded to FiOS and all of its revenues.

7) Access Lines Declines? Most AT&T and Verizon Lines Aren’t Being Counted.

a) AT&T’s statements about the ’access lines' are deceptive.

Why? First, the entire U-Verse deployment is based on the PSTN wires. They are simply reclassifying the lines --- the PSTN are telecommunications lines, but when U-Verse voice service is placed on the lines, then those lines are NOT counted as a line – and are reclassified as an ‘information service’

AT&T even admits this in their annual report.

b) The Accounting of Lines Is Only Counting Voice Lines and Not All Other Lines

“Any such forward-looking policy must enable a shift in investment from the legacy PSTN to newly deployed broadband infrastructure. While broadband usage – and the importance of broadband to Americans’ lives – is growing every day, the business model for legacy phone services is in a death spiral. Revenues from POTS are plummeting as customers cut their landlines.”

As this shows ‘broadband lines and revenues are different than ‘land lines’ or POTs”. This deceptive slight of hand then lowers the land line accounting and is ‘plummeting” because all of the other revenues, as we discussed are going into a different financial bucket.

c) Non-Switched Lines, the Majority of Lines ARE NOT COUNTED

There are two types of lines that are part of the PSTN and have been since the 1980’s – Switched and Non-Switched. Non-switched, also called ‘special access” are data lines that include everything from alarm circuits to DSL or FiOS.

Total Telco Lines, 2006

Source: FCC

|Type of line |Lines (millions) |Percentage by Type. |

|Switched |140 |42% |

|Non-Switched |197 |58% |

|Total |337 |100% |

The FCC stopped requiring any break outs of lines in 2007; the last published data showed that non-switched lines had become the majority of lines in the US—and in the quote above, these lines ARE NOT counted in the ‘line losses’.

There are also “information service” lines, which besides VOIP are PSTN lines that have been reclassified once they have an added additional service. According to numerous sources, once an information service, such as DSL is combined with a telecommunications service, such as a POTS line, then the entire line is reclassified.

There is no data about this provided by the FCC. There’s no data from AT&T’s SEC filings. There’s no data collected by the state commissions – but AT&T wants you to ‘trust them’.

8) VoIP Scam

The closing down of the PSTN is being done with the claim that VoIP services are the future. However,

a) VOIP can not be used without a broadband connection. According to Magic Jack, the service requires at least 120 Kbps in both directions to sound good –How does shutting off ½ of the US and not upgrading those networks benefit these customers with the promise of VoIP?

b) VoIP is a phone service. VoIP is not the Internet. It is not broadband and it is not the wires, and yet they are closing down the wires, which handle other services besides voice, such as data services.

c) Freedom from VOIP? AT&T et al have neglected to tell customers that this service currently has a plethora of taxes, fees and surcharges, some are even made up, and it mimics the current phone charges. Moreover, these taxes, fees and surcharges were added because over the last decade, now-AT&T and Verizon hounded the regulators to make it look like all other ‘POTs’ service. The original intent of VOIP was to act to go around traditional phone service and save money but that never happened because the companies took multiple actions to add all of the traditional fees so that it would NOT have the ‘disruptive’ attributes as to price.

9) Wireless Only? -- The Numbers are also Cooked.

The wireless only statistics currently being promulgated come from the Center for Disease Control are being used to claim there are major line losses. We do not argue that customers have been dropping phone lines for wireless service; but, the latest statistic, 36% residential households are ‘wireless only – is simply made up when it comes to accurate accounting of lines.

The problems with these statistics?

a) The CDC does not include business customers

b) The CDC does not count the wires so it leaves out the basic question – “Do you have a cable or broadband or internet service that uses a wire?”

There is no source of data that takes these two items into account.

Conclusion:

The PSTN is all wires and all services over the wires. The accounting that has been provided is based on one service – voice calling POTs”, which has not been the dominant service over the wires for over decade. And yet, the companies have been able to fool most of America into thinking that regulations on ALL wires should be removed.

Have you been fooled? Believe them at your peril. Feeling foolish won’t stop the closing of the PSTN.

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