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VoIP vs. PSTN: VoIP heats up as the PSTN moves into retirement

As service providers kill the public switched telephone network in favor of IP phone services, users ponder how VoIP vs. PTSN issue affects business.

As the number of enterprises who rely on mobile phones and IP phone services for communications rises, it's only a matter of time before the business market severs its legacy public switched telephone network connections, said Karen Kervin, senior research analyst at Mokena, Ill.-based Nemertes Research Group Inc.

While not every business is jumping at the chance to leave a reliable, legacy phone network that been in place for decades, they soon may not have a choice. The Federal Communications Commission (FCC) recently reported that between 2008 and 2011, VoIP subscriptions increased at a compound annual growth rate of 19%, while switched access lines declined nearly 9% a year. With demand from both businesses and consumers in decline, service providers are transitioning away from their legacy plain old telephone system (POTS) infrastructure towards VoIP alternatives, and enterprises have to prepare for a change.

Is the PSTN a thing of the past?

As more enterprises adopt IP phone services -- like Verizon Fios, Vonage and Skype -- there has been a natural "hollowing out" of the POTS because VoIP offerings don't have to go through the legacy phone switches of the PSTN, said Brian Washburn, research director of network services for Washington, D.C.-based Current Analysis Inc. "We are seeing some service providers, like AT&T and Verizon, turning off their legacy phone switches -- what used to be the mainframes of the voice world -- little by little, because enough people are leaving these services," he said.

AT&T recently announced its request for the Federal Communications Commission (FCC) to oversee the provider's complete transition away from the legacy POTS infrastructure as early as 2018.

"The use of the POTS infrastructure [has] plummeted in the last decade … as [customers] switch to VoIP alternatives, wireless services and other forms of digital communications," said Bob Quinn, AT&T's senior vice president for federal regulatory and chief privacy officer in a blog post. "We requested that the FCC oversee … this IP transition to capture and address the operational, technical and policy issues that necessarily will arise as we go through the process of retiring and transitioning away from TDM technology and services."

VoIP vs. PSTN: What does the enterprise need to know?

The natural decommissioning of voice switching technology that has occurred over the past 10 years has led service providers to adopt VoIP technology for a fraction of the cost of maintaining their phone switches. As a result, many business customers are taking advantage of IP phone services without even realizing it, Washburn said. "VoIP has become cheaper and more flexible for providers, and their customers by extension," he said.

If service providers are making the first move to kill the PSTN, enterprises will have very little to do to prepare, Washburn said. "When AT&T replaces its voice switches with VoIP, they will find ways to preserve existing customers' experience so that they probably won't even know there has been a switch."

But as enterprises transition to IP phone systems, many naturally migrate over to other services -- like Session Initiation Protocol (SIP) trunking or hosted voice options, Nemertes' Kervin said. With SIP trunking, VoIP users get advanced functions. Such functions include the ability to communicate seamlessly with fixed and mobile phone users, the ability to combine data, voice and video onto one trunk, and the option to add users easily, she said.

More on IP phone services

SIP trunking vs. VoIP: What's the difference?

How VoIP performance differs over WAN, LAN

VoIP services: On-premises and VDI environments

More businesses are looking to replace their POTS with VoIP services, said Jim Murphy, president and co-founder of Phone Power, a Winnetka, Calif.-based VoIP provider. In addition to cheaper calls, VoIP offers advanced features that the PSTN can't provide -- like the incoming call manager that Phone Power offers its customers, he said. The rule-based calling feature pushes certain calls off of landlines and onto mobile phones based on the caller or time of day, he added.

And while the transition to VoIP my not require enterprises to purchase new hardware phones, they may need to put a session border controller in place to route SIP trunks, Nemertes' Kervin said. "Enterprises must also make sure they have a service-level agreement in place so they can be guaranteed a certain level of service," she said.

While hesitation around VoIP services has historically centered on voice quality and reliability questions, those concerns are going out the window as VoIP has matured, Phone Power's Murphy said.

"[Business customers] are realizing that VoIP is not a different technology, it's just the evolution of the telephone," Murphy said. "If companies want to achieve certain business goals, they have to move to VoIP because their traditional phone service is not going to be able to provide new functionality -- like mobility."

Let us know what you think about the story; email: Gina Narcisi, News Writer and follow @GeeNarcisi on Twitter.

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