No Dialtone: The End of the Public Switched Telephone Network

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TABLE OF CONTENTS  I.    INTRODUCTION II.   THE TRANSITION       A.  Goodbye to All That           1.  The Public Switched Telephone Network           2.  The Incredible Shrinking Network           3.  The Carriers Make Their Move           4.  Changing Facts on the Ground           5.  FCC Response       B.  What We Talk About When We Talk About the PSTN           1.  Unpacking the Concept           2.  The Legacy PSTN               a.  Technical Architecture               b.  Regulatory Arrangement               c.  Market Structure           3.  Enduring Objectives               a.  Universal Connectivity               b.  Strategic Infrastructure               c.  Social Contract       C.  The Regulatory Dead-End           1.  All or Nothing           2.  The Perseverance of Unregulation III.  RECONCEIVING THE INTERNETWORK       A.  What Falls Away       B.  Interconnection           1.  Importance of Interconnection           2.  Internet Interconnection Disputes           3.  VoIP Interconnection       C.  Coordination           1.  Role of Coordination           2.  Numbering           3.  Reliability IV.   TRANSITION MECHANISMS       A.  Section 214           1.  The Approval Requirement           2.  Cutting the Regulatory Gordian Knot B.   Date Certain V.   CONCLUSION 


All good things must come to an end. The Public Switched Telephone Network ("PSTN") is the foundation for the modem global communications system and the myriad benefits it delivers. Today, the era of the PSTN is swiftly coming to a close. The PSTN's technical, economic, and legal pillars have been undermined in the United States by three developments: the rise of the Internet; customers and providers abandoning wireline voice telephony; and the collapse of the regulatory theory for data services. This Article provides a framework for moving beyond the PSTN, by distinguishing the aspects of the existing system that should be retained, reconstituted, and abandoned.

The transition from the PSTN to a broadband network of networks is the most important communications policy event in at least half a century. (1) It calls into question the viability of the Federal Communications Commission ("FCC"), the Communications Act, and the telecommunications industry as we know it. Yet the significance of the transition is not widely recognized. Attention has focused on specific manifestations and consequences, such as the rise of "wireless-only" households and problems with rural call completion.

The time has come to address the situation squarely. The lesson from prior structural transitions in communications such as digital television, the AT&T divestiture, and the opening of local telephone competition is that, with good planning and the right policy decisions, such shifts can proceed smoothly and open new vistas for competition and innovation. Without this planning, structural transitions are dangerous opportunities for chaos that can gravely harm the public interest.

There are two mainstream views about how to handle the PSTN transition. One is that it represents the completion of a deregulatory arc begun at the AT&T divestiture and accelerated by the Telecommunications Act of 1996. The other is that longstanding regulatory obligations need only be extended to the new world. Both are wrong because they treat the PSTN as a unitary thing. What we call the PSTN is actually six different, but interrelated, concepts:

1) a technical architecture;

2) a regulatory arrangement;

3) a business and market structure;

Kevin Werbach, Associate Professor of Legal Studies and Business Ethics, The Wharton School, University of Pennsylvania. Contact:

4) universal connectivity;

5) strategic national infrastructure; and

6) a social contract.

The elements earlier on the list are rooted in the particular historical, legal, and technical circumstances that gave birth to the PSTN. …