Efforts to phase out the PSTN are reaching epic proportions.

That’s according to Richard Shockey (News - Alert) of Shockey Consulting, and chairman of the board at The SIP Forum.

Some of the industry’s biggest names – including AT&T, Global Crossing, Time Warner (News - Alert) Telecom, XO Communications and others – have been calling for a sunsetting of investment in TDM infrastructure. And late last month Time Warner Telecom took the argument a step further by filing with the FCC (News - Alert) a petition requesting that the commission issue a declaratory ruling on an all-IP interconnection model, which he says would mean the end of POTS.

Interestingly, Time Warner Telecom and its cohorts on this issue are calling for the FCC to reclassify interconnected VoIP from a Title I to a Title II service, which will move it from an unregulated service to a regulated service. I say interestingly because you don’t often see tier 1 service providers actively seek regulation of an unregulated business. It seems to make even less immediate sense when you consider that these service providers are migrating more of their traffic to VoIP, so you might think they’d prefer to keep the growing part of their business on infrastructure that is unregulated and just keep a bare bones operation going on the regulated PSTN side.

But continuing to prop up the PSTN creates giant operational inefficiencies that these carriers apparently are so keen to address that they’re actively seeking regulation around interconnected VoIP. If everybody is required to support interconnected VoIP, the thinking is, no one will be required to meet TDM mandates around interconnection.

Shockey estimates that U.S. carriers could realize at least $20 billion in operational savings over 10 years if they were allowed to phase out PSTN infrastructure.

Sunsetting PSTN investments also fits in with what’s happening on the wireless side of the communications business, which arguably has became the most important part of this business. Indeed, AT&T (News - Alert) and Verizon, among others, have embraced and are now rolling out 4G LTE wireless networks, which are based on all-IP architectures.

The Time Warner Telecom petition for a FCC declaratory ruling on interconnected voice is akin to what Pulver did years ago in his petition related to Free World Dialup, says Shockey, calling the latter item “the legal umbrella that let Skype (News - Alert) and others take off like a rocket.” Although the former is about moving to a regulated paradigm, and the latter is about categorizing VoIP as an unregulated service, Shockey says both had/could have major implications for the communications industry going forward.

For rural telcos, whose businesses are dependent on the PSTN and the regulatory regimes surrounding it, this whole discussion is very unsavory, Shockey says. On the other hand, he says, getting rid of POTS could help the larger telcos – who are less operationally efficient in delivering voice than their cableco rivals – save on PSTN infrastructure and potentially funnel those savings into newer technologies like HD audio and video.

Of course, the large ILECs don’t have a great record of investing heavily in new technologies until they’re forced to do so. I mentioned that it would not be surprising if the large carriers instead put their savings in the bank or used them to deliver dividends to shareholders. Shockey says even if they did that it would make for a healthier service provider businesses, which is good for those companies and for the industry as a whole.