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December 05, 2012

Study Reveals Demise of Plain Old Telephone Service

By Ashok Bindra, TMCnet Contributor

To better understand the disruptive factors and trends U.S. wholesale voice buyers think will most impact their businesses, Bandwidth’s division inetwork commissioned a new survey, which was conducted by research firm ATLANTIC-ACM. The survey reveals the dramatic changes in how service providers will offer, and end-users will consume, telephony services.

As per this study, 74 percent of respondents noted that the death of the office landline – the desk phone – will be the single most disruptive force in voice services, anticipating the continued penetration of mobile devices by business users. Likewise, 72 percent of the respondents placed the migration to 100 percent VoIP over long-term evolution (LTE (News - Alert)) as a close second in market disruption, representing the continued blurring of the lines between wireless carriers and VoIP service providers.

However, 70 percent of the respondents noted the death of “Plain Old Telephone Service” (POTS) as the third most disruptive factor, with providers of legacy phone services looking to gain efficiencies and offer end-users the enhanced features only available from IP-based platforms.

While nearly half of the respondents cited new competition as their biggest threat, beating out the more traditional threats of pricing pressure or market consolidation. New entrants approaching telecom from the Software as a Service (SaaS (News - Alert)) perspective will more aggressively compete in what has historically been the domain of a relatively small number of traditional dial tone providers.

Judy Reed Smith, CEO of ATLANTIC-ACM, stated, “While certain resellers will claim there is still money to be made in Plain Old Telephone Service (POTS), the overall market continues to decline.” “End-user migration to wireless, VoIP and everything in between will drive shrinking demand for traditional wholesale voice services, leaving those providers unwilling to deviate from ‘business-as-usual’ in the dust.”

The ATLANTIC-ACM survey also revealed the availability of application programming interfaces (APIs) increases respondents’ interest to work with a given wholesale provider. In addition, the influence of APIs is particularly evident among those who plan to increase their spending in the coming year, indicating that more businesses are looking to integrate voice services directly into their end-user applications or services.

“A growing number of our wholesale voice buyers are going beyond selling dial-tone by using our APIs to embed voice and SMS services into their end-user offerings. They are breaking new ground by developing 'over-the-top app' for IP-enabled mobile devices, call analytics purposes, rich media, social networks, limited only by their imagination,” said Steve Leonard, executive vice president and general manager of Bandwidth’s inetwork division.

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Edited by Rich Steeves
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