What Comes After the PSTN?

Some would say it is misleading to talk of the “end of the public switched telephone network,” as that implies something more than a technology replacement (IP for TDM) as the industry earlier evolved from copper to optical fiber, or analog to digital switching, will happen.

In a real sense, the decommissioning of the PSTN, though a big event, is something veterans of the mobile industry are well acquainted with. That, in fact, is the meaning of the current transition to “fourth generation” networks.

The first generation U.S. analog network was shut down in 2008, for example. The second generation TDM network will be shut down in 2017, according to AT&T.

Verizon will shut down its 2G and 3G networks in 2021.

Still, there is a reasonable sense that something more than mere generations of outside plant, switching technology or protocols are at play for the fixed network. In part that might be because it hasn’t happened before, as it has in the mobile business.

The other obvious difference is that the mobile ecosystem, which requires tighter integration of networks, devices and apps, arguably will have more protection from “dumb pipe” scenarios that worry fixed network executives.

An open-ended question rhetorically asked by TeleGeography VP Stephan Beckert at the Pacific Telecommunications Council illustrates thinking about “the end of the PSTN.”

“Does anyone have a post-PSTN business model?” he asked. The question came in the context of a presentation about the international voice market. Mobile executives would not understand the question, since it is akin to asking “does anyone have a post-analog business model?”

Granted, the post-analog mobile business model did not have to contend with the existence of the Internet. And though mobile service providers are starting to deal with over the top alternatives to carrier services, they have not faced nearly the pressures on the fixed network business.

But the transition to IP, and the diminution of voice as the key revenue driver, probably already has an “answer.” The answer obviously is broadband. One way or the other, fixed network service providers will base their revenue models on broadband access and as many valuable carrier applications and partner relationships using that network, as is possible.

Entertainment video is the second most important application, beyond high speed access. Beyond that, much remains to be seen. But in a simple sense, the post-PSTN business model already can be seen: broadband is the foundation service.

On the other hand, the precise timing of voice as a sizable revenue stream is hard to predict. Service providers have any number of retail packaging techniques that could extend the carrier voice revenue opportunity for some time, even if usage begins to dwindle significantly.

Think of the way voice not is bundled with broadband and video entertainment to encourage people to keep voice service in order to get discounts on all three services. That doesn’t necessarily mean people use the voice service much, but they pay for it.

But even a self-proclaimed optimist such as Becket notes that although “voice is not dead yet,” the end is coming, for voice as a major revenue source.

Executives already know the answer, it is fair to say. The answer begins with broadband access, but only begins there. Much more will have to follow, and the outcome is uncertain at the moment. But it builds on broadband.


Popular posts from this blog

Voice Usage and Texting Trends Headed in Opposite Directions

What to Do About Industry Challenges? "Take the Package," One Exec Quips

Verizon has a Brand Promise Problem