POTS Marketplace Still Profitable – Just Not For Long

In an article originally published in Capacity Magazine and posted recently by Atlantic-ACM, Dr. Judy Reed Smith presents a purported discussion with a gentleman that “manages a company growing rapidly by reselling lots of Plain Old Telephone Service (POTS) to satisfied business customers” – he is mysteriously referred to as “Mr. Successful Reseller”.

Dr. Smith goes on to point out that the POTS marketplace still can be seen as significant from a revenue generation perspective at an estimated $11.5 billion in wholesale voice services sales in 2012. On the other hand, this figure is in decline compared to the $15 billion generated in 2010, and the even more dramatic forecasted decline to $6.5 billion in 2018.

The primary source of this erosion among consumers is the use of wireless as a replacement for landlines, with wireless-only homes in the USA jumping from 17.5 percent in 2009 to 34 percent by the beginning of 2012. Of the 84.4 million landline users, nearly 29 million already have VoIP services, indicating another real threat to those POTS line services.

In the same regard, adoption of Business VoIP services increased from 21 percent in 2009 to 34 percent at the start of 2012, also providing evidence that this is a real trend rather than a passing fancy. In this case, it isn’t voice communications that is becoming obsolete – it is the method of transport, which is the traditional PSTN.

Even the Federal Communications Commission’s Technical Advisory Council recognized last year that the “sunset” of the PSTN was on the horizon, and projected 2018 as the target. I know of no one that thinks the PSTN will simply fade away during 2018, but anyone knowledgeable about voice communications has just about accepted that it is going to happen. There is a tremendous amount of work that needs to be done before that is a reality, especially for VoIP in rural and underdeveloped areas, but it will happen.

Does that mean that businesspeople such as “Mr. Successful Reseller” should immediately close up shop and give up? Not exactly, as there’s still plenty of business to be done between now and the eventual setting of the sun on the PSTN.

The bottom line for fortunate voice resellers pulling an annuity of revenues is to save for the next venture, as the lifespan of their sweet deal is closing rapidly for consumers and more slowly, but still surely, for businesses. Internet telephony and wireless communications will certainly be with us for the foreseeable future. The same cannot be said regarding POTS.

Check out the original article from Dr. Judy Reed Smith: And the ‘Death of Voice?’ Debate Wages On…