POTS becomes old school

America's Network, Jan 15, 2004 by Kirk Laughlin

What's stoic, reliable and about to endure an unprecedented thrashing during the course of 2004?

The answer of course is plain-old-telephone-service (POTS), the longstanding bedrock of worldwide telephony communication that, in the face of formidable adversaries, is beginning to quake underfoot.

The demise of POTS has long been predicted, yet its performance under fire (and blizzards and floods) sets a standard that disruptive challengers will still have a hard time matching. While VoIP is crusading to undermine POTS, wireless telephony has already been on the job for several years. Traditional telcos have been wearily observing mobile operators chew away at their core access line business, putting a hard limit on the expansion of POTS.

The loss of access lines is only a part of the fracturing. Volume across traditional telco infrastructure is down and, as a result, carriers are watching revenues decline because less traffic means less tariffs. Linking the decline of POTS with the decline of telcos is, however, a common mischaracterization. RBOCs and IXCs are in the mobile game, and are increasingly into VoIP. They are so far steering clear of WLANs, another nascent riser that could produce more destabilization for POTS in the enterprise.

Clearly 2004 is shaping up as the year that VoIP begins to really rock the foundation of POTS, primarily because top-tier carriers across North America are backing the technology, which is a significant shift from the way things were only one year ago.

"We believe 2004 will be the breakout year for VoIP. The technology is rapidly moving out of the network core to the network edge," Vik Grover, an analyst with Needham and Company, reported in a brief recently. "The marriage of VoIP edge devices and applications to broadband pipes sold to an increasingly mobile workforce obsoletes legacy voice models."

VoIP thrives because of economics. Yet, doubts about its scalability and robustness have hounded the technology since its early ascendancy. Canada's Telus, for example, road tested its IP network for nearly a year by routing all corporate traffic on the network.

Satisfied with its performance, Telus unveiled its IP-One network last November to enterprises. "IP-One is the fruit of two years of collaboration--it's been an evolution," says Lui Fogolini, vice president of service provider operations at Cisco Systems Canada. "We're truly treating voice as data and providing the required QoS."

In 2002, 36% of telephone systems sold in Canada were IP-based. That figure was expected to rise to 48% by the end of 2003.

The rise of VoIP also upsets POTS in a way that is still hard to fathom. Because of the rich feature set of IP telephony, users, not providers, will dictate the shape of the IP revolution based on new habits and usage patterns. Analysts predict an environment where users have greater control of communication services, due largely to the dozens of new features embedded in IP systems. For instance, users can review received calls on a computer screen instead of listening to voice mail. They may also exercise an all-call that enables the network to initiate simultaneous calls to different numbers owned by the same individual.

SBC's recently announced hosted IP service includes a "find me, follow me" feature, which permits enterprise workers to forward calls to designated numbers, such as a mobile number or satellite office. The service is currently available in 18 metro areas.

Mobile telephony is becoming the de-facto communication service standard for the younger generation. Reports continue to show that younger people have less loyalty to landline.

Although barely perceptible now, one sure-hit trend for 2004 is the twin utilization of VoIP and mobile communications by single households. Although neither individually has the track record or reliability of POTS, together they are more formidable, offer more flexibility, and quite likely are more economic than the stand-alone legacy option.

TREND:

POTS is under attack. Economics and technology flexiblity make VoIP and wireless serious disruptors.

GUIDANCE:

The reliability of POTS will not be matched in short term.

KEY METRIC:

Half of Canada's phones sold in 2003 were IP.