The Future of Telephony: Moving POTS into the 21st Century

by Pamela Hilliard Owens on January 30, 2010

Switchboard OperatorHow much longer will the traditional landline telephone companies provide circuit-switched networks? If AT&T and Verizon have their way, it will not be much longer. The Federal Communications Commission (FCC) in the United States has requested public comment about migration to all-IP networks, and AT&T is arguing that traditional service providers are hampered by old technology and discouraged from investing in future broadband access.

The PSTN (Public Switched Telephone Network) and the POTS (Plain Old Telephone Service) are “relics of a bygone era”, argues AT&T. Even though 90% of the American population has access to broadband Internet service, it is estimated that reaching the final 10% of the American will entail an investment of over US $350 billion. Meanwhile, the number of traditional landline customers for AT&T dropped by 47.9 million in the last calendar quarter; Qwest and Verizon reported similar losses in landlines consumers. For Verizon Communications, sales to businesses dropped significantly in 2009, and the company sees growth for 2010 only in wireless and VoIP services. Residential customers are canceling their landlines telephones at greater rate in 2009; and Verizon sees that trend continuing into 2010.

Meanwhile, the United States Congress is attempting to charge VoIP providers the same Universal Service Fee (USF) that it charges traditional telecommunications providers. The USF is used to subsidize telephone service to rural communities, lower-income customers, and public libraries. However, as traditional PSTN services decline and VoIP services increase, the FCC is attempting to expand the definition of a telecommunications provider to VoIPs who usually call themselves “information providers”.

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Written by: Pamela Hilliard Owens.

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