CUB’s Telecommunications Advocacy Role: A Policy Primer - Part 1

Interactions between information and communications technology (ICT) regulation and legislative policy development are complex, and too often they don’t reflect residential customers’ best interest. This complexity and impact to residential customers merits a two-part blog. Today’s “Part 1” entry summarizes CUB’s early ICT consumer advocacy history, technical background, and a discussion of the regulated and not-so-regulated aspects of the ICT arena. “Part two”, to be posted on Tuesday August 6, will focus on recent legislative victories, failures, and next steps.

CUB’s ICT consumer advocate role is critical because of the increasingly outsized necessity of advanced communications in the lives of residential customers. Since being created by Oregon voters in 1984, CUB has advocated for all residential utility service customers’ best interest. CUB’s ICT advocate role is nuanced because CUB strategically navigates three intertwined policy worlds: 1) state-regulated “landline” voice service, referred to here as “plain old telephone service” (POTS); 2) lightly-regulated (by Oregon and/or the federal government) wireless and “Voice over Internet Protocol” (VoIP) voice services; and 3) unregulated “broadband internet access service” (BIAS).

Providers deliver BIAS to customers through a variety of media: 1) copper-based POTS or cable television networks; 2) wirelessly over a multitude of radio wave bands (think mobile data usage, Wi-Fi, or even TV whitespace); 3) via satellite “spot-beam” (which relies on a terrestrial network); or 4) wired directly to residential or business locations through ultra-high-speed fiber-optic cable (increasingly the preferred method of digital equity advocates due to its near-limitless bandwidth capacity and long-term investment security).

Some of CUB’s earliest advocacy focused on ICT issues:

• In 1987, CUB demanded a $36 million refund from Pacific Northwest Bell for their residential customers due to the company lowering business rates at residential customers’ expense.
• Also in 1987, CUB endorsed the Oregon Legislature’s creation of a Residential Service Protection Fund. Administered by the Oregon Public Utility Commission (PUC), the Fund supports programs, such as the Oregon Telephone Assistance Program (OTAP), the Telecommunications Device Access Program, and The Oregon Telecommunications Relay Service to assist low-income and disabled Oregonians. OTAP helps offset the cost of voice and BIAS for low-income households.
• In 1999, CUB endorsed the Oregon Legislature’s creation of the Oregon Universal Service Fund (OUSF). Similarly administered by the PUC, the OUSF supports telephone companies in high-cost (often rural) areas to facilitate comparable and affordable landline voice service throughout the state. Only POTS and certain VoIP customers contribute to the fund, despite all ICTs utilizing the same networks.

CUB continues to advocate for Oregon’s residential POTS customers, many of whom are elderly, rural, and/or low-income. We, however, recognize the nuance of our advocacy in the broader ICT arena. This is due to the rapid “IP transition” undertaken by the incumbent and regulated POTS companies - or “incumbent local exchange carriers” (ILECs) and other carriers – as well as changes in consumer preference/expectation.

ILECs such as CenturyLink and Frontier Communications (perhaps soon to be “NW Fiber”) have served residential and business customers in Oregon with copper-based POTS for decades, but have fading interest in this business, especially when it comes to residential service.

The ILECs increasingly believe they have a stronger business case for delivering BIAS because POTS service is of fading interest to certain residential customers, particularly those living in urban areas with greater access to notionally viable voice service alternatives, and where there exists at least some semblance of a competitive BIAS market.

Beyond this evolving “customer preference/expectation dynamic”, for ILECs and other carriers to independently maintain networks that devote significant capacity to residential POTS, but at the same time support all ICT services (including BIAS and wireless voice) they must assume potential economic liability.

Rather than maintaining this potential liability by serving residential customers with POTS, the ILECs want to become unregulated BIAS providers that, at the same time, face less competition due to their control of legacy networks.

The evolving customer preference/expectation dynamic described above applies in many densely populated urban environments, but it is not universal. Variations exist due to the uneven deployment of BIAS infrastructure; variable customer knowledge and comfort with technology; the inability to access or afford an internet-enabled device; and what are often significant price barriers for low-and-moderate income households.

However, the customer preference/expectation dynamic is certainly not true for rural customers who do not – and will not for the foreseeable future – benefit from widespread wireless coverage. Frequently, if rural Oregonians seek out a monthly BIAS subscription, it isn’t available due to a lack of infrastructure. Digital inequality (general lack of access to or inability to use the latest digital tools and information) applies even more strongly to low-income residents – regardless of whether they live in urban, suburban, or rural communities.

With all this in mind, CUB is committed to advocating for continuing PUC regulation of POTS – particularly carrier of last resort obligations for ILECs, “competitive local exchange carriers”, and potentially other carriers – while also advocating for ICT customers’ interests. In other words, CUB advocates for both traditional POTS and other ICT customers.

The following set of conditions inform CUB’s thinking and advocacy:

• While the number of POTS customers in Oregon continues to shrink year-over-year, many thousands still exist in communities across the state.
• Most of these customers reside in the Portland Metro Area where competition for voice service is better than in rural communities.
• The economics for telecommunications utilities to reasonably maintain POTS service-territories are better in areas with a critical mass of residential customers – such as in the Portland Metro Area.
• Rural communities and their residents have much less competition in their alternative voice and BIAS markets.
• Because they no longer want to be considered regulated telecommunication utilities, the ILECs increasingly look for ways out of their obligation to maintain safe, reasonable, and affordable POTS.
• There remain thousands of customers across Oregon that not only prefer, but continue to rely on a POTS line for their primary voice and internet access service because of where they live; their knowledge of, comfort with, and access to technology; and economic circumstance.

The above points illustrate the complexity of the ICT service environment across Oregon, as well as CUB’s singular fitness to advocate for all ICT customers. Our consideration of regulated, lightly regulated, and unregulated ICT services, as well as our deep concern with digital inequality, and the extent to which the IP transition excludes or exploits certain groups (namely older adults, people with disabilities, non-native English speakers, low-income people, and communities of color), uniquely positions us to advocate effectively for ICT policies that benefit all residential customers.

Stay tuned to the CUB Blog for Part 2, in which we will discuss recent legislative landmarks in CUB’s ICT regulatory and policy agenda - coming soon!

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