May 17, 2012 – Technology is helping communication companies merge telephone, television and internet services, but a push to deregulate may leave some customers on the wrong side of the digital divide during this convergence, according to a Penn State telecom researcher.

“Moving away from copper lines is an example of abandoning obsolete technology and embracing technology that is faster, better, cheaper and more convenient,” said Rob Frieden, Pioneers Chair in Cable Television and professor of telecom and law. “But the risk is that we may be creating a digital divide—not necessarily a divide between the rich and poor, but between the information-rich and information-poor.”

Telephone companies are lobbying for government regulators to free them of their traditional role as a public utility, citing the convergence and availability of new communication technologies, such as cellular phones and fiber optic cable, that make copper-based telephone land lines obsolete, according to Frieden. However, not all these alternatives are as affordable and as ubiquitous as copper land lines, a problem that could leave many rural residents underserved, he said.

The researcher, who presented his critique at the End of the Phone System workshop held at the University of Pennsylvania in Philadelphia, said that rural customers could replace land line telephones with cellular phones, for example, but most cell phone companies charge a fee for each minute of use, while most fees for land lines are unmetered and are paid through a fixed monthly charge.

Frieden also doubts that cellular service will be as dependable as land lines.

“Cell phone companies have these colourful maps that show how well they cover areas,” Frieden said. “But there are lots of places […] that do not have cell phone service, or offer limited services not suitable for broadband, internet access.”

While fiber optic lines are more common, they are usually not found in rural or remote areas. “The phone companies are right,” said Frieden. “There are other forms of competition now, but these alternatives are not fair or adequate everywhere.”

As communication technologies merge, telephone companies face stiff competition from cable companies, which are classified as information service providers by the government and face limited regulation. Frieden said telephone companies, however, are regulated as a utility. As a utility, phone companies—called carriers of last resort—are obligated to provide service to customers. To increase profitability, telephone companies would like to be released from the carrier-of-last-resort designation that binds them to providing high-cost, labour-intensive telephone land line service.

Frieden said that the push to end the phone company’s status as carriers-of-last-resort may be the first step toward complete deregulation.

While telephone company lobbyists suggest market forces will ensure all customers will eventually receive equal service in a deregulated environment, Frieden is skeptical: “Everyone wants to say, the marketplace is great,” Frieden said. “But there’s also something called market failure… particularly in rural and low-income areas”.