Two different areas in the U.S. will play guinea pig to AT&T’s (NYSE:T) effort to move away from the old copper-based phone system that has been used across the country for decades. The company will shift these areas to newer, high-capacity fiber-optic lines, the Washington Post reports.
The outcome of AT&T’s experiments may help regulators decide whether or not to allow AT&T and other telecom companies to stop offering traditional wired service, opting instead for new wireless services as more and more customers migrate in that direction.
AT&T has picked two different communities in Alabama and Florida to use as test sites. If the project is approved by the Federal Communications Commission, it will affect thousands of people in rural Carbon Hill, Alabama, and thousands more in the larger community of West Delray Beach, Florida, where many elderly retirees call home; almost a quarter of the population there is older than 65.
The company will begin by asking customers to switch to the new wireless services. If a later version of the project is approved, the company could be allowed to stop offering the traditional wired services altogether.
“We want to make sure our customers are comfortable with the new services,” said Hank Hultquist, AT&T’s vice president federal regulatory said, speaking with Bloomberg.
Last year AT&T argued that it should be allowed to discontinue traditional wire service, saying that more than 70 percent of residential customers in its 22-state service area had abandoned the older services. AT&T is working on developing a wireless option that will effectively turn home phones into cell phones and be able to carry the data needed by medical devices and alarm systems. The trials will test whether the connections provided by the new wireless system is equally secure as the older copper-wired services.
AT&T says it chose Carbon Hill in part because 21 percent of the former mining town is below the poverty line. AT&T says the Carbon Hill community will help the company address the particular challenges of changing systems in poor, rural areas.
AT&T doesn’t need to file with state officials in Alabama or Florida in order to conduct the tests, Hultquist said, per Bloomberg. ”We looked for places where state law wasn’t going to be an issue, where the regulatory and legal environment in the state was conducive to the transition,” Christopher Heimann, an AT&T attorney, told the news service.
A&T says it loses 20 percent of its copper subscribers each year to IP-based services; industry experts call this the “IP transition,” according to the Washington Post. Phone companies could better compete against the trend toward IP-based services if they were freed from maintaining obsolete networks, Anna-Maria Kovics, a visiting senior policy scholar at Georgetown University, said in a study published in the fall of last year, according to the publication.
Chief Executive Randall Stephenson says that if AT&T were allowed to retire its wired services, it would result in dramatic savings: “It’s a big darn deal. The amount of cost that it removes from our legacy businesses is dramatic and significant,” he told Bloomberg.
Jim Cicconi, executive vice president of external and legislative affairs, said to the news service that continuing to support the old network is “unsustainable,” noting that the number of plain telephone service lines provided by the company dropped to 12.4 million in 2013 from 15.7 million just a year earlier.
Consumer groups warn that phone companies shouldn’t sacrifice services for some Americans while improving services for others, noting that AT&T and competitors have very real economic interests for transitioning to the new network. Bob Quinn, senior vice president for federal regulatory matters at AT&T, says that the company is “very cognizant that no one should be left behind in this transition,” according to Bloomberg.