OCTOBER 2017

Fact Sheet Protecting Consumers during Network Modernization Neal Walters AARP Public Policy Institute

Telephone Network Technology Is Changing Traditionally, landline1 telephone calls were carried over copper wire networks using transmission technology known as Time-Division (TDM). As demand for broadband and data-intensive activities continues to grow and aging copper-based networks become more costly to maintain, telephone companies are switching the technology they use to provide service. Consumer protections are necessary to ensure that this transition does not affect the affordability or reliability of telephone service.

Why Is Landline Telephone Service Important to Older Americans? Older adults are less likely to join the growing numbers of households discontinuing landline home service.2 While increasing numbers of people are using cellular devices in lieu of a landline phone at home, almost half of adults ages 18+ in America continue to use landline home .3 Recent research found that older households are more likely than younger households to view landline telephone service as their most important service.4 One reason many retain their landline phone is to ensure that they can quickly contact 911 operators in the event of an emergency.5

How Are Telephone Networks Changing? Newer technologies are replacing the old copper wire network. One common replacement uses Protocol (IP) standards6 provided via a fiber or cable network. This technology also can support high- speed Internet services for consumers. The most popular network employs Voice over Internet Protocol (VoIP) telephone technology that allows consumers to make and receive phone calls over a broadband Internet connection. A recent Federal Communications Commission report notes almost half (49 percent) of residential customers are using VoIP technologies for home landline phone access.7 In certain rural areas with lower population densities, some telephone companies are switching to fixed wireless8 telephone systems that transmit phone calls using technology. Unlike the fiber or cable networks, the wireless technology often does not provide the same voice quality or level of service as does traditional copper technology.

Consumers Still Need Protections Affordability The new networks may result in telephone service becoming more expensive for customers. As companies switch to the new systems, many offer telephone access as part of a bundled package that also contains Internet access and television. Bundled packages can be substantially more expensive than current basic phone service and may put the cost of telephone access beyond the reach of low-income consumers. If landline service becomes too expensive, some may be forced to go without telephone access or to switch to lower-cost alternatives. These alternatives,

1 FUTURE OF WORK@50+ OCTOBERMONTH 20152017 such as mobile cellular phones, may not offer the reliable as older systems or if it cannot provide same reliability or level of access to services as do precise address locations to 911 dispatchers. Finally, landline phones, particularly in rural areas with poor because battery backup systems typically last a wireless coverage. matter of hours, the customer could be left without Further, unlike the traditional TDM network, a working phone during the extended power both IP and wireless technologies need an outages that often follow natural disasters. individual power source to operate and require a battery backup for the phone to work during a How Do We Protect Consumers? power outage. This creates additional costs to the As companies upgrade the consumer, which can be prohibitively expensive for networks over which landline service is delivered, some low-income customers. regulatory protections are needed to ensure that the transition does not jeopardize public safety, make Quality and Reliability of Service basic telephone service unaffordable, or diminish Another concern is that telecommunications the quality of voice connection services. These companies might not invest in maintaining the protections include the following: existing copper networks during the transition to xxNotification standards are necessary so the new technologies. Because the switch to newer consumers know in advance when their service communication networks is occurring gradually, will change and what this means for them—for copper networks continue to serve many customers example, the need to purchase a battery backup. across the country. This gradual switch could impact the reliability of telephone service for those xxThe new telephone networks must meet reliability consumers remaining on copper networks. standards set by federal and state regulators to Further, some legacy systems—such as ensure continued consumer access to the same or telecommunication devices for the deaf, home a better level of telephone service and quality. security systems, and medical alert technology— xxTelecommunications companies switching to may not work on IP and wireless networks. In new technologies must continue to offer a basic addition, the new technologies might compromise telephone service tier that is affordable to low- access to 911 emergency systems if it is not as income consumers wanting landline service.

1 A landline telephone uses a copper wire or fiber optic telephone line for transmission, compared with a cellular line that uses radio waves for transmission. 2 Stephen J. Blumberg and Julian V. Luke, “Wireless Substitution: Early Release Fact Sheet 634, October 2017 of Estimates from the National Health Interview Survey, July-December 2016,” National Center for Health Statistics May 2017, https://www.cdc.gov/nchs/data/ © AARP PUBLIC POLICY INSTITUTE nhis/earlyrelease/wireless201705.pdf. 601 E Street, NW 3 Ibid. Washington DC 20049 4 Craig Bond and Howard Shatz, “U.S. Consumer Preferences for Telephone Follow us on Twitter @AARPpolicy and Internet Services, Evidence from the RAND American Life Panel,” Rand on facebook.com/AARPpolicy Corporation 2016, http://www.rand.org/pubs/research_reports/RR1382.html. www.aarp.org/ppi 5 Associated Press, “Why Nearly 46 Percent of Households Still Have ,” For more reports from the Public Policy New York Post, May 4, 2017, https://nypost.com/2017/05/04/why-nearly-46- Institute, visit http://www.aarp.org/ppi/. percent-of-household-still-have-landlines/. 6 IP service transmits telephone calls over the Internet instead of using the traditional Public Switched Telephone Network. 7 Federal Communications Commission, “Voice Telephone Services: Status as of June 30, 2016,” Industry Analysis and Technology Division Wireline Competition Bureau April 2017, https://apps.fcc.gov/edocs_public/attachmatch/DOC-344500A1.pdf. 8 Fixed wireless refers to wireless devices or systems that are situated in fixed locations, such as an office or home, as opposed to devices that are mobile, such as a cell phone.

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