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Telcos race toward an all-IP future

At the CES Broadband Unlimited conference, communications execs explain why new native IP networks are essential for consumers and the next generation of connected devices.

Larry Downes
Larry Downes is an author and project director at the Georgetown Center for Business and Public Policy. His new book, with Paul Nunes, is “Big Bang Disruption: Strategy in the Age of Devastating Innovation.” Previous books include the best-selling “Unleashing the Killer App: Digital Strategies for Market Dominance.”
Larry Downes
5 min read

LAS VEGAS--As attendees arrive today for four days of innovative developments in consumer technologies, a related revolution is also getting attention at CES. At today's Broadband Unlimited conference, representatives of the communications industries and others were unified in calls for an accelerated transition from outmoded legacy copper phone lines to new networks that would treat all traffic as IP packets from end to end -- what has sometimes been called the "Internet Everywhere" network.

"If 'The Graduate' were being remade," according to Daniel Berninger, a pioneer in voice over Internet Protocol (VoIP) communications and now president of the nonprofit Voice Communications Exchange Committee, "the advice given to today's Benjamin Braddock wouldn't be 'plastics,' it would be 'all-IP telco.' That's where the money will be made." (VCVX is a Washington, D.C.-based startup that describes itself as "working to speed the transition to all-IP networks.")

Daniel Berninger VCXC

After decades of slow convergence of voice, video, and data communications from a wide range of different network technologies and protocols, communications industry leaders are now fully committed to transitioning to a single network infrastructure in which all communications are transmitted as packets using Internet Protocols, regardless of whether those packets travel over wired or wireless networks -- or increasingly both.

While phone companies once dismissed packet switching as an inferior communications protocol compared with traditional switched technologies, carriers large and small have now embraced the need for more efficient IP networks to support the exploding demand of mobile technology users, cloud-based services, and the coming data deluge of "machine to machine" communications.

Consumers, of course, are driving that transformation. In the U.S. and elsewhere, customers have been voting with their feet, abandoning old wireline phone services in favor of fiber and cable-based VoIP and mobile services. According to a report last week (PDF) from the Centers for Disease Control, less than half of all American homes still had wireline phone service at the end of 2011. Hank Hultquist, vice president for Regulatory Affairs at AT&T, today said that number could fall to 25 percent by 2015.

As fewer users come to rely on the copper network and older switching technologies, maintenance has become more difficult and expensive. That's a big part of why AT&T and other carriers are hoping to retire legacy networks quickly, replacing them with IP networks that will use a combination of fiber optics, 4G LTE wireless, and short copper loops to handle voice, video, and data traffic.

In November, AT&T committed an additional $14 billion over the next three years to accelerate the replacement of its wired and wireless network technologies. Other carriers are making similar investments.

Berninger argues that the operating expenses of native IP networks could be as much as 90 percent less than today's fading Public Switched Telephone Network (PSTN) infrastructure. But that's not the only reason carriers are investing billions to make the transition.

Native IP networks will also support new voice services, including wideband audio or "HD Voice." HD Voice dramatically expands the frequency range of what is currently possible over narrowband PSTN. While human speech ranges between 80Hz and 14kHz, legacy phone networks narrow that to between 300Hz and 3.4kHz. HD Voice, on the other hand, transmits between 50Hz and 7kHz or higher. (One reason voice quality can be poor even on LTE network calls is that the sampling range is reduced for transit over PSTN backhaul networks.)

Removing Legacy Regulatory Barriers to Change

The only thing holding back the transition to all-IP broadband networks now is an equally decaying infrastructure of legacy regulations at the federal, state, and local levels. Holdovers from the days of the former telephone monopoly, these complicated rules require carriers to seek permission to discontinue or even to change service offerings once they've been approved by regulators.

"We pretend there are two industries -- information technology and communications technology," Berninger said. "But today the only meaningful difference is that the latter is still the subject of intense federal, state, and local regulation." That's one reason -- perhaps the key reason -- consumer electronics and mobile technologies can improve at the speed of Moore's Law, while traditional voice communications are still largely stuck where they were "eighty years ago," Berninger said.

To its credit, the Federal Communications Commission last month began soliciting comments on proposed trials of PSTN to IP changeover in a few select locations. The agency also created a Technology Transitions Policy Task Force to help speed the deployment of broadband technologies.

Julius Genachowski
FCC chairman Julius Genachowski FCC

"Technological transitions don't change the basic mission of the FCC," FCC Chairman Julius Genachowski said at the time. "But technology changes can drive changes in markets and competition. And many of the Commission's existing rules draw technology-based distinctions. So the ongoing changes in our nation's communications networks require a hard look at many rules that were written for a different technological and market landscape."

(On Wednesday, Genachowski will deliver a keynote speech at CES, as he has every year since being confirmed as FCC chairman.)

Indeed, the FCC could be credited with starting the process of retiring legacy copper networks, a subject treated in detail in the 2010 National Broadband Plan.

AT&T's Hultquist said the trials will help regulators and carriers resolve several unanswered questions about how best to make the transition and over what time period, including ensuring that vital services, such as 911 calling, won't be interrupted. To conduct the trials, the FCC will need to waive a wide variety of reporting and other detailed regulations at least temporarily. The FCC may also need to run interference with state and local regulators who share jurisdiction over legacy phone service.

Ultimately, it will be up to the FCC to coordinate with other regulators to establish and enforce firm dates for the transition to new all-IP networks. Timetables will also ensure that no existing subscriber is left without basic telephone service, including those subsidized today by the Universal Service Fund. In that sense, the transition to all-IP networks will be similar to the relatively simpler transition of television broadcasting from analog to digital in 2009.

But the clock is ticking. At CES' opening keynote presentation Monday night, Qualcomm CEO Paul Jacobs predicted that 5 billion smartphones would be sold between 2012 and 2016. And echoing comments from the Broadband Unlimited conference earlier in the day, Jacobs argued that the next revolution will be based on machine-to-machine communications. "It's not the 'Internet of Things,'" he said. "It's the Internet of Everything."

And the Internet of Everything needs a network built on the principle of Internet Everywhere.