Note: This post was written in 2014. We’ve written more content with new research since then, including What Is A PBX System?
If you’re in the telecom industry, then you’ve probably heard the end of the landline telephone system is approaching. This may sound catastrophic—but what does this change really mean to you?
To find out, we spoke with three veteran telecom insiders: one with a background in traditional telecom, another with a background in mobile telecom and the third a founder of a VoIP provider.
Where We Stand Now
The US landline telephone network is over a hundred years old. And it doesn’t seem a day younger. It’s had a full life, passing through different corporate hands and complying with many historic federal regulations. One lingering regulation—enacted as part of the Communications Act of 1934 which among many other things allowed AT&T to keep its landline monopoly—requires AT&T to keep the network alive, even as landline subscriptions continue to plummet.
AT&T has been trying for years to get this regulation repealed, claiming, as others do, that the switch to VoIP has made landlines obsolete. While the FCC has been slow to decide, it announced just last month that “voluntary experiments” in the transition to VoIP could begin.
AT&T praised the announcement, and recognized it as an important step towards a fully-digital national telephone network. No one can say when the final step will be taken, but most in the industry expect that within about 10 years, the U.S. landline telephone network will no longer exist.
Indeed, we are already farther along in the nationwide VoIP transition than you may think. Here’s what our experts have to say about the relatively short future of the landline telephone network.
Traditional Telecom’s View
Bill Horne spent 25 years with Verizon, working primarily as a network engineer. He now runs a telecommunications consulting group and is the editor of The Telecom Digest, the oldest (continuously-published) online periodical.
“Since the first thought of younger generations of employees, when needing to communicate with someone, is ‘I’ll just email (or text) him,’ much of the preparation has already been done. Anyone below forty years of age will be comfortable with a smartphone in their pocket, and so the demise of POTS (Plain Old Telephone Service) will arrive, as the saying goes, ‘not with a bang, but a whimper’.
Indeed, American cultural preferences have been moving away from analog and towards digital technologies for decades. From analog records we moved to digital CDs and MP3s; from traditional broadcast television came digital TV-on-demand; and email is vastly preferred over handwritten letters. So, far from getting replaced by some new, foreign technology, the American landline system will be replaced by its very natural successor: digital telephony.
What about small-picture concerns for individual businesses? Horne explained what he has planned for the companies he consults: “I’ll be converting some of my customers over to SIP phones, and probably installing better routers for them, and switching them to higher-speed and higher-priced data plans. Others will want to keep their old PBX [office switchboard] and/or key systems, so I’ll be offering VoIP-POTS [conversion] devices to tide them over until new VoIP equipment comes down in price.”
So, for smaller businesses with tighter budgets, the inevitable switch to digital can be taken one step at a time.
The Mobile Perspective
Ritch Blasi had a 35-year career with AT&T, mostly in its wireless division, and is now a mobile telecom consultant and senior vice president of Comunicano. When asked for his thoughts on the transition away from the POTS, he made an interesting connection to mobile phones and the growing popularity of Bring Your Own Device (BYOD) programs (in which employees use their personal phones at work).
The BYOD trend, he predicts, along with ever-improving cellular networks, will easily fill any service gaps left behind when the landline network is finally terminated. And this isn’t something businesses will even need to work hard at; it will happen naturally. To illustrate his point, he suggested we consider how the average business phone system is currently designed:
“Right now, whether hosted in the cloud or on-premise, PBXs are the heart of every company’s communications system. And companies spend [hundreds of dollars] on every VoIP or traditional deskphone needed to connect to it.”
“Now,” Blasi continues, “ask yourself this question: why would I spend that money on a phone that has to stay on my desk when I can buy an iPad for half the price, load it with an app that offers all the features of a deskphone—yes, voice too—and connect to my office [PBX] through a WiFi connection or anywhere else with a cellular link?”
In other words, not only do businesses have alternatives to traditional fixed networks for keeping employees, offices and customers connected, the alternatives bring opportunities (like BYOD) which employees are already asking for. Furthermore, the alternatives are often cheaper and provide greater flexibility. Many businesses are choosing to offer these alternatives for their own reasons, regardless of what may happen to the POTS.
Blasi does not feel that the end of the POTS will leave any gaps in the market or any business searching for a dial tone. The POTS won’t meet some sudden end; rather, it’s undergoing a process of transformation.
“Planning time is now, and the technology and devices [needed] for the transformation are available today,” he says.
The VoIP Provider’s Role
Flowroute is one of a handful of companies representing the new face of the telecom services industry. Flowroute provides SIP trunks: the new breed of Internet connection designed specifically for VoIP traffic. Traditionally, T1 (and similar) trunks were used to connect businesses with phone services and the outside world. With VoIP, they’re getting replaced by SIP trunks.
Bayan Towfiq is Flowroute’s founder and CEO. He describes three different challenges to the complete decommissioning of the POTS. One is the decommissioning of copper wire. This refers to the backbone of the POTS: the copper wires that criss-cross the country connecting rural towns, big cities and lone houses in the middle of nowhere. As it stands now, carriers are required by law to maintain the copper-wire network. It’s not clear what would become of the networks if this law is repealed.
“The second is the move to VoIP-based interconnection, where carriers can interconnect virtually instead of physically with one another.”
Currently, big-name telecom carriers maintain what are called “Carrier Hotels.” These are secure buildings, often in urban areas like the famous 60 Hudson Street in Manhattan, where traditional network-to-network connections are made with other carriers.
Since VoIP runs on the Internet Protocol, VoIP networks can be linked online. Just as VoIP allows office PBXs to be virtualized in the cloud, it also allows these national infrastructure connections to be made virtually, in the cloud, and without paying for expensive urban real estate.
“The third challenge,” he continued, “is the numbering resources issue. There’s a lot of concern by public utility commissions and traditional telecoms that there’s going to be very rapid number exhaustion, because of the way that the rules are currently written.” It’s yet to be determined if we should even keep our old system of telephone numbers, area codes and dialing prefixes. Many are suggesting a new system will be necessary. Whatever happens, there will need to be regulations in place to manage the apportioning of numbers.
So, what’s the final word? Will the POTS someday be a thing of the past? Yes, that seems inevitable. Is the transition to VoIP something businesses need to prepare for? Yes, though many have already made the switch—and those that haven’t will be able to make it gradually and in most cases, without great expense. The transition is already underway; the final decommissioning of the POTS will be a mainly symbolic event.