Why the Public Switched Telephone Network Is Sunsetting

In my last post, titled Verizon No Longer Concerned With Telephones Connected With Wires, I described an interview Ivan Seidenberg, chief executive of Verizon Communications, did at a Goldman Sachs investor conference on Thursday. In the inteview Seidenberg described how, by using the decentralized structure of the Internet rather than the traditional design of phone systems, Verizon had a new opportunity to cut costs sharply.

This summer I spent some time reading Martin Sauter's excellent new book Beyond 3G, Bringing Networks, Terminals and the Web Together. In the book Martin describes the movement in the wireless/cellular world away from circuit-switched telephony technologies like 2G, 2.5G (EDGE) and even 3G to 4G based technologies like LTE and WiMAX.

What does wireless technology have to do with copper wires? Like these wireless technologies, the Public Switched Telephone Network (PSTN) uses circuit-switched telephony technology designed around voice. Even DSL (a technology basically designed to extend the life of the copper wire based network by a few years) is a circuit-switched service - Internet based traffic goes to the Internet and voice traffic goes - you guessed it - right to the PSTN.

Circuit-switch based networks have made a lot of sense for the past 100 years or so. They work well for voice calls because by nature they are deterministic. If a circuit is available a connection is made. If a circuit is not available the call attempt gets rejected and the customer gets some kind of message back from the busy switch. Once a connection is made (phone-to-phone) the connection is also deterministic - each call is independent and cannot influence any other calls. A great design for voice communications - whether it be with copper wires or over wireless frequencies.

The problem with these circuit-switch based networks though is they were designed for voice. Sauter argues correctly that when networks are designed for specific applications, there is no separation between the network and the applications which ultimately prevents evolution. In addition, tight integration of applications and networks also prevents the evolution of an application because changing the applications also requires changes to the network itself. The PSTN basically cannot evolve beyond where it is now - it's been tweaked-up to the point where it cannot be tweaked-up any more.

Internet (TCP/IP based) technologies work using exactly the opposite approach. A neutral transport layer carries packets and any kind of application (voice, video, data, etc) can efficiently send high and low volumes of data through the network. For applications the connection process is transparent - the device operating system establishes an Internet connection before the application is even launched. The network and any applications running that use the network are independent of each other.

Verizon Wireless, AT&T, Sprint, etc are all moving to non-circuit-switched IP based 4G technologies like WiMAX and LTE to handle voice, video and data traffic. It is inevitable that Verizon's landline division (along with other landline carriers) move in this same direction.

Verizon No Longer Concerned With Telephones Connected With Wires

According to the New York Times, that's what Ivan Seidenberg, the chief executive of Verizon Communications said at a Goldman Sachs investor conference on Thursday.

Why? Traditional landline customer numbers have been shrinking and not just for Verizon. Earlier at the conference according to the same Times article, Randall Stephenson, chief executive of AT&T, and Ed Mueller, head of Qwest Communications, both talked about seeing a day when their landline businesses would stop shrinking.

Here's a few more interesting quotes from the piece:

Mr. Seidenberg said that his “thinking has matured” and that trying to predict when the company would stop losing voice landlines “is like the dog chasing the bus.”

“Video is going to be the core product in the fixed-line business,” Mr. Seidenberg declared. And the focus will move from selling bundles of video and landline to video and cellphones, he added.

By converting most of its landline operation to FiOS, Mr. Seidenberg said Verizon had a new opportunity to cut costs sharply. FiOS uses the decentralized structure of the Internet rather than the traditional design of phone systems, which route all traffic through a tree of regional, then local offices.

“We don’t look any different than Google,” he said. “We can begin to look at eliminating central offices, call centers and garages.”

The article finishes with Seidenberg talking of the psychological lift he had gotten when he finally escaped from the shadow of the legendary Alexander Graham Bell and his copper wires. “Once I shed myself of the burden of chasing the inflection point in access lines and say ‘I don’t care about that anymore,’ I am actually liberated,” he said.

[Thanks to Mark O for sending me a link to this article - be sure to read the entire New York Times piece linked here.]

A Report on Internet Speeds In The U.S.

The Communications Workers of America released their third annual Speed Matters survey of Internet speeds last week. The 67 page report takes a look at how U.S. Internet speeds compare state-by-state and with the rest of the world. Here's some highlights:

• The United States ranks 28th in average Internet connection speeds.
• The average download speed for the nation was 5.1 megabits per second (Mbps) and increased from 4.2 Mbps last year.
• The average upload speed for the nation was 1.1 mbps and increased from 873 kilobits per second (Kbps) last year.
• The U.S. average upload speed is far too slow for patient monitoring or transmitting large files such as medical records.
  

How do we compare? 24 other countries in the world have faster broadband than we do in the U.S. Here's some of the faster ones:

• In South Korea, the average download speed is 20.4 Mbps.
• In Japan, the average download speed is 15.8 Mbps.
• In Sweden, the average download speed is 12.8 Mbps.
• In the Netherlands, the average download speed is 11 Mbps.

According to the CWA report, at our current rate of increase, it will take the United States 15 years to catch up with current Internet speeds in South Korea. Also:

• 90% of Japanese households have access to fiber-to-the-home networks capable of 100 Mbps.
• The average advertised download speeds offered by broadband providers in Japan was 92.8 Mbps and in South Korea was 80.8 Mbps.

The report also indicates relatively few Americans have access to truely high-speed two-way communications:

• 18% of those who ran the speed test on the Speed Matters website recorded download speeds slower than 768 Kbps which does not even qualify as basic broadband according to the new(er) Federal Communications Commission definition.
• 64% of speed test participants connected at less than 10 Mbps downstream which is not enough bandwidth for high-definition video.
• Only 19% connected at speeds greater than 10 Mbps and only 2% of those exceeded 25 Mbps downstream.

In the United States, Delaware was ranked number one with an average download speed of 9.906 Mbps and an average upload speed of 2.310 Mbps. Puerto Rico was ranked last (53rd) with average download speeds of 1.043 Mbps and average upload speeds of 383 Mbps.

Some will argue about the way the data was collected and things like sample sizes, etc. In the end though we are performing incredibly poorly when compared with the rest of the world.

The Speed Matters website has the full free report that includes a state-by-state breakdown along with the option of viewing and downloading individual state specific reports. Be sure to check it out and see how your state did.

[Note: Image above taken from full report, page 1]