Reach Out and Ping Someone
AT&T a couple of years ago issued a statement that it wanted to retire its portion of the public switched telephone network (PSTN) within ten years. AT&T has placed further emphasis on its desired path by including the point in a response to an FCC Notice of Inquiry on the matter. This should not surprise anyone following the direction of communications. Compare the size of a switching center to an IP Communications data center. The cost to build, operate and maintain a TDM plant is perhaps a magnitude more than supporting packet switching. However, it is not the cost of the network driving AT&T’s decision, they are recognizing that their customer base is changing and switching to service providers such as Broadvox and mobile devices.
Consider these trends…according to the Industry Analysis and Technology Division Wireline Competition Bureau of the FCC VoIP subscriptions are up 33% over the last 18 months while switched access lines are down 14%. Moreover, a quick look at revenue shows that supporting the existing PSTN is a losing business model. Toll service revenues have fallen from $87.8 billion in 2000 to a projected $40.7 billion in 2010. That is a decrease in revenues of over 50%. In addition to IP communications, mobile service is where many businesses and consumers are moving. Increasingly, people are using their mobile phones as their only means of communications with 26.6% of U.S. homes having made the conversion according to the National Center for Health Statistics. Even if a home has a landline, it is less likely to be the primary means for receiving or placing calls. Texas is reported to have 52.8% of homes using wireless as the primary way of receiving calls although a landline service is available.
Clearly, AT&T and the other ILECs have to alter their business strategy. However, the direction is not clear. VoIP and mobility may be the method of choice today but neither is the perfect answer. More on that Wednesday.