The Benefits of Retiring the Grand Dame

The Benefits of Retiring the Grand Dame

Terminating the PSTN will be a very good thing for consumers and businesses. The first real benefit is that the cost of the service will be less. Whether the replacement is IP based or a mobile solution, supporting the underlying infrastructure is cheaper than laying copper or fiber. Therefore, the price will be less. However, the ILECs have to be careful in their pricing strategies. If they were to reduce the price of the service to reflect the actual reduction in cost, then their overall revenues would drop sharply resulting in plunging share prices and potential operating losses. The current solution is to offer bundled solutions where voice, data/Internet access, video/TV/cable and mobile services are sold together at a lower price than if purchased separately. By packaging their offerings this way, the service provider can maintain a higher margin and potentially see an increase in revenue. Businesses can fight back and get better pricing by insisting on unbundled services supporting either VoIP or mobile.

The second benefit is end-to-end services supported by SIP (Session Initiated Protocol). High Definition (HD) voice is such a feature. HD voice offers a much improved level of sound where conversations flow more easily and accented speakers are better understood. The deployment of HD enabled phones has increased as the price has dropped from over $400 per phone to below $100. However, HD voice requires an end-to-end IP connection. If the call terminates using the PSTN, then the improved voice quality is lost.

As the ILECs abandon the PSTN, broadband access will also be improved. The ILECs are quite aware of the growing demand for broadband. Consequently, there are plans to increase broadband access and speeds nationwide. However, because the US has no single nationwide carrier, as in most countries, the deployment will be uneven with a disparity in features and pricing. This will be the primary reason that the US will continue to lag most industrialized nations in the speed and price of broadband. In the US we consider speeds in excess of 10 Mbps to be very good while other countries are offering up to 1 Gbps. The ILECs and CLECs should be able to focus investment in improving broadband when they no longer have to support funding the PSTN infrastructure.

Mobility is already seeing more investment as the major players offering mobile services implement LTE (Long Term Evolution). Simply put, implementing LTE results in higher data speeds. The first phase of the standard supports downloads speeds of 100 Mbps and uploads speeds of 50 Mbps. The goal for LTE compatible networks is to achieve downloads speeds of 1 Gbps. In any event, LTE will support higher bandwidth applications over mobile devices such as video and services that require data streaming. Mobile services are viewed as the most likely replacement for the PSTN due to lower build out cost and the demand for anywhere, anytime and any device services.

There will be pitfalls as the grand dame known as the PSTN is retired, but it should result in a brighter future.

See you Monday.

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