Market musings

What Will Happen After Plain Old Telephone Service Is Gone?

by Sasha Viasasha
November 21, 2017

Plain old telephone service is coming to an end. For over a century, copper wires and analog switches, and circuits connected the world into one happy telephone network. This network was at the heart of business and social life, and the engine of economic growth for many decades. 

"History has shown that new networks catalyze innovation, investment, ideas, and ingenuity. Their spillover effects can transform society — think of the creation of industrial organizations and the standardized time zones that followed in the wake of the railroad and telegraph.... The way forward is to encourage technological change while preserving the attributes of network services that customers have come to expect." -- Tom Wheeler, former FCC chairman 

What will happen after plain old telephone service is gone?

Life will go on after IP telephony replaces public switched telephone networks (PSTN), aka plain old telephone service (POTS). That day is coming soon, though, and businesses are getting prepared for what's coming next. Network World predicted that, “Replacement of the PSTN with a global VoIP-only network delivering service provider wired voice and wireless voice is not a question of if, but when.”

The nation’s two largest phone service providers, Verizon and AT&T in that order, plan to sunset PSTN by 2020 in favor of an all-IP broadband architecture. The digitalization of telecom is long overdue. By some estimates, the retirement of ancient wires, legacy servers and cumbersome desk phones will release $2 trillion in operating profit into the global economy by 2025. 

Copper land lines are fading into history as they are either switched out with optical fiber or simply forgotten. Telecom companies are devoting resources to developing VoIP and other future communications technology, such as HDVoice and VoLTE.

The realization that the end is near for PSTN is one of the primary reasons that business VoIP is now the top phone service choice by US businesses, according to Gartner's Software Advice report. Their survey on business VoIP usage revealed many surprising insights into how businesses communications have changed and where they are headed.

Around 36% of business have VoIP-based phone systems today. PSTN comes in at second place with 24% of businesses, despite the fact that it’s not built to handle big data and video. In third place is primary rate interface (PRI) which is preferred by 11% of large enterprises using a mix of PBX, ISDN circuits and T1 lines. You can think of SIP trunking as the digital version of PRI.

The smallest group is in fourth place, with only 8% of businesses at present, represented by companies using only their mobile phones as their primary business line. This category includes standard cell service with no business phone features, mobile VoIP apps and virtual PBX systems.

This category is expanding rapidly to accommodate the growth of mobile workers and online-only businesses in the future of work.

Mobility drives business VoIP adoption

When business owners were asked to identify the most important features in choosing their next phone systems, their answers all revolved around mobility. The top reason 29% of business owners choose a VoIP business phone systems was in order to forward incoming calls to mobile phones. The next feature with 25% was an intelligent voicemail that was easy to navigate and retrieve messages while traveling. For 21% of respondents, it was important to have a phone system was compatible with their existing mobile phones.

Mobility is the key to the top three answers and the driving force for business VoIP adoption. The need for scale and agility ranked high as well.. Businesses need phone systems that can simply add, delete or modify phone user profiles on the fly. Other important reasons for getting rid of old systems were:

  • Their old phone systems had aged beyond its useful life
  • They want new features common to PBX systems, like AI call attendants
  • They need geo-routing to automatically direct calls to teams in other locations
  • They were paying far too much for a phone system that was too hard to use
  • A need for data analytics and other next gen features

More than half of companies with legacy PBX systems and one fifth of on-premise IP-based PBX systems are already experiencing end-of-life issues with their hardware. Digitalization shifts the burden of upgrading the hardware to the phone system provider, and that is becoming more critical as technology cycles accelerate. Telecom are preparing for this shift by pouring billions of dollars into upgrading their networks. 

The new last mile

The new last mile in telecom isn't hardwired into a fixed structure but follows the user wherever they are. As the workforce is increasingly mobile and remote, empowering mobility in the field becomes a key differentiator in business phone service. Mobile-first, software-based phone systems are designed to be managed and deployed across your mobile phone infrastructure. Virtual phone systems that live in the cloud and intuitively adapt to network capacity to deliver the highest quality voice experience possible.

Reinventing voice

As voice is better supported by mobility and smart tech, a new user experience is emerging. AI is transforming telecom, from more resilient networks to better call quality and advanced analytics. Spoke Phone is a truly global phone system with DDI's in 56 countries, AI auto-attendant, and smart geo-routing. To learn more about Spoke, including how our AI is powering the next generation voice UX, sign up for an interactive demo and see how to transform your mobile phone or business phone line into a smart office phone system.