Good-bye to long distance

Submitted by acohill on Tue, 11/01/2005 - 10:22

The FCC has approved the SBC-AT&T merger and the Verizon-MCI merger. What these deals really mean is that long distance as a service is dead, dead, dead, as I like to say.

The baseline for telephony service is now nationwide flat rate calling, or some variant of that that includes a lot of long distance minutes in the base rate and something around or below five cents a minute if you go over.

AT&T and MCI have dwindled in recent years to nearly nothing because they could not look past the long distance cash cow. Both companies had millions of customers paying around twenty or twenty-five dollars a month for long distance service, and it was easy money.

But the whole long distance business was built decades ago on private, long distance networks that connected to local switches. It was a big, expensive business to build all those trunk lines, so even after Ma Bell was deconstructed in 1984, there were really only three major players--AT&T, MCI, and Sprint. Most other long distance companies just bought wholesale and resold capacity.

Like everything else, the Internet has been the big spoiler. What has happened over the past several years is that most long distance traffic has been switched over to packet-based Internet trunks, which is cheaper and easier to do, and the old dedicated long distance networks became irrelevant.

The death of long distance has been inevitable, but it remains to be seen if it these mergers do any good. We have fewer and fewer companies owning a larger and larger share of telecom services. I remain steadfast in believing, as many others do, that the only way out of this marketplace monopoly (not a good thing) is distributed ownership of networks. Communities and governments have to get involved in creating open service provider networks to create a balance to the monopolies we have in most communities.

If we don't do this, the future of many communities will be increasingly grim, as high telecom costs will make these places noncompetitive from an economic development perspective.