Voice is (NOT) Dead

For the last decade, the industry and press have declared the death of voice, or at least the traditional PSTN network.  Like the premature report of Mark Twain’s death, the reports are exaggerated, but not without merit.  Voice is dying, but it is not dead; in the telecom industry, change happens fast, but implementation can be slow.  

For years, communications networks have focused on the migration from the old copper wire network infrastructure to optical fiber and coaxial cable networks.  This change makes sense because newer technologies provide for increased capacity and speed, and according to the carriers, maintaining the old switched copper network is expensive.  While the carriers have been announcing this migration and telling the FCC that maintaining the “old” services is untenable, and while enterprises and the carriers’ own networks have quickly gone to the more robust technologies, old fashioned voice and PRI/ISDNs/ analog access continue to exist.  Years after first announcing the death of voice, the carriers are slowly providing notice that they are finally pulling the plug, at least in part.  Last month, CenturyLink filed a notice with the FCC indicating that it plans to retire copper loops and replace with them fiber loops in certain locations; likewise, Verizon filed to retire copper facilities in a number of locations including numerous wire centers in Pennsylvania and New York.  These were not the first such filings and they won’t be the last.  If customers don’t successfully object to the filings, facilities in these locations will be pulled in just a few months.  

Is traditional voice dead?  Statistics back the decline of traditional voice.  In its 2019 study, the FCC found over a three-year period ending in December 2017, the number of retail switched access lines declined at a compound annual growth rate of 12% per year.  Interconnected VoIP lines grew exponentially.  Still, the FCC concluded that there were only slightly fewer interconnected VoIP lines than switched access lines.  Change is fast, implementation can be slow.  By the end of 2020, the number of switched access/PRI-ISDN and other analog services will be much smaller and the use of alternative technologies much greater.  With the widespread acceptance of SIP, MPLS, dedicated Internet access, and other technologies, no one even thinks about making long distance calls.  Not surprisingly, traditional long distance (interstate, intrastate and international) minutes of use has plummeted, and for many years so has the cost of such long-distance calls.  

Spoiler Alert:  while the number of POTS, PRI-ISDN, switched access and other “traditional” voice services will be much smaller by the end of this year, they will not be extinct.  In fact, a surprising number of enterprises will still need and pay for such services, this year and for several years to come.  Why?  Because enterprises are still using traditional voice.  This can be attributed to many factors. 

• First, inertia.  The lines work, so if the contract price is good why change?  (Or in some cases there is little tracking of the contract price – but we will discuss that in a minute.) 
• Second, even enterprises that have moved to a SIP or mobile first strategy currently retain some PRIs or switched access for back-up, emergency services, alarms, elevators (POTS lines don’t require external power), testing, and fax lines (often necessary for certain industries such as medical transcripts and prescriptions).
• Third, enterprises with very small offices, particularly in more remote areas, find it easier and cheaper to retain plain, reliable switched access/PRIs.  
• Finally, sometimes enterprises have local services they don’t know that they have (or thought they disconnected). 

Carriers are conflicted – they want the migration, but they don’t.  Another reason old fashioned switched access and POTS lines have not completely died out is internal conflicts within the carriers.   Yes, it is expensive to maintain them, but they are already in place and the customer is often captive.   Moreover, they can be a cash cow, particularly where enterprises have lost track of what they have.   Local bills are next to impossible to decipher, disconnects are hard to time with migrations to other services, and often carriers have byzantine rules that have to be followed to ensure that a disconnect is completed and the service stops billing and the bills are often left without appropriate scrutiny.  This has led to enterprises being billed for months and years beyond the date they thought they had disconnected service or being billed astronomical rates for usage.  While for years long distance rates rapidly decreased, now some carriers are dramatically increasing rates for long distance.  One carrier has increased ‘per minute of use’ rates for international long distance to a certain location to over $100 per minute.  If an enterprise has not negotiated and maintained rates for calls to/from countries that are in their deal and a call is made to them, an enterprise may find itself with unusually large invoices (or not even realize they are outside market because of the complexity and lack of granularity of the invoices). 

Tradition accounts for retained landlines.  Remember, Verizon (the local provider) purchased MCI (the long-distance provider) and SBC (local) bought AT&T (long distance).  Leadership often comes from the local exchange provider (ILEC) ranks and old biases die slowly.  There is a certain tension within the carriers; the business units that sell “replacement services” want the revenue, but the business units that are providing local like to keep the revenue.  As a result, enterprises will see contractual clauses that commit the enterprise to long circuit terms and sometimes revenue commitments.  Carriers also include the right for the carrier to discontinue service on very short notice, but the customer cannot do so without paying a hefty fee.  Moreover, if the customer’s contract expires, the customer is likely to face rates that triple or quadruple.  If a carrier is making that type of money, why push a customer off the service unless you have to (particularly if that means the customer might move to a newer service provided by a different provider)?     

Enterprises should not assume that voice is dead and ignore the role and their contracts for traditional telecom services.  Enterprises must not let inertia take over when it comes to local and traditional telecom services.  There are several ways that an enterprise can ensure that the pain of this technology transition is minimal – some simple, some challenging.  

• First, know what you have and what you need.  Doing this type of inventory can be challenging, but it is essential to managing your network and costs. 
• Second, watch your contracts. Not just your local contracts, but also any contract that has commitments into which the local contracts tie.  Make sure that you have the right to terminate local services without liability if the carrier gives you notice that it is withdrawing the service.  Ask for language from the carrier notifying you if the carrier seeks to discontinue the service.  Know what you must do to disconnect services and keep track of all your disconnects.  Make sure language in your dedicated internet and SIP contracts don’t require keeping a POTS line for testing, or if it is necessary put in protections so you will not be in breach if the carrier can’t provide the line at a reasonable fee. 
• Third, review your bills; if there are unexpected charges or you can’t make sense of them, probe further.  Meanwhile, plan your migration so that you can minimize any early termination charges or list rates.  
• Finally, recognize that there are other protective terms you may want to seek (but remember, your leverage may be low, so be realistic and pragmatic) and actions you can take – and try to take them.  

Failing to evaluate your need for traditional telecom services, to plan, and to carefully monitor your contracts because “there is not much left” is a recipe for overspending, service outages or scrambles for replacement services, and for unnecessary early termination charges.  This part of your network should not be your primary focus, but it does require attention.  Voice is not dead (yet), make sure that its slow death is not a quick drain on your budget.

For further information, please contact Laura McDonald, Keith Cook, or the LB3 lawyer or TC2 consultant with whom you regularly work.