Lamentations in the daily press over AT&T's decision not to pursue new residential business centered on the disappearance of the venerable Ma Bell brand. We cried those particular tears last spring, when AT&T sold off its existing wireless infrastructure to Cingular. This summer, we're more concerned that the withering of AT&T's consumer business validates Robert Lucky's theory that common carriers can't make a profit in the 21st century.
Lucky, former director of research at both Telcordia and Bellcore, told the Communication Systems Design conference last March that customers' expectations of free service may make it impossible for facilities-based carriers to realize a profit in any domain. Circuit-switched voice has been a loser for years, prompting carriers of all types to packetize voice as quickly as possible. Best-effort packets to carry data became a commodity when the Internet went mainstream.
In theory, Internet Protocol packets carrying low-latency voice should demand a premium because of the quality-of-service mechanisms required. But IP service providers like Vonage and Skype have set up the expectation among customers that global voice calls can be made dirt cheap, with the same "all you can eat" packet philosophy that characterizes broadband data service. If Skype's strategy is reminiscent of the DSL resellers that promised "free DSL"-resellers that are all now defunct-well, that's precisely Lucky's point.
This fall, the FCC will consider the type of emergency line-powered services and universal service funds that voice-over-IP carriers must support. It's trendy to tout the libertarian philosophy that free is good and regulation is bad. But that's like demanding to get all your retail goods at Wal-Mart and then wondering why retail diversity disappears.
No matter how automated a transport network gets, someone's got to pay for maintenance of the physical network in the ground. If all communication becomes packets and all packets become commoditized, no carriers can make a profit, and the network deteriorates. Lucky reminded his listeners in March that there's no free lunch, and it is imperative that customers realize that IP traffic can't be treated as a virtually free commodity service.
But that may be like warning the Wal-Mart shopper that the lowest-priced retailer isn't always the best deal in the long run.