Is Dial Tone Done?

Rethinking Communications

Is Dial Tone Done?

By Jon Arnold, Founder  |  May 22, 2012

This article originally appeared in the May 2012 issue of INTERNET TELEPHONY magazine.

For those of you who know me, I’m back with a new monthly column here at INTERNET TELEPHONY magazine. I’ve been an occasional contributor to TMC (News - Alert) over the years, and from 2008-2010, I wrote a monthly column for their portal titled Service Provider Views. You can still peruse those posts, but going forward, I’m taking a broader view, hence the Rethinking Communications name.

So, what can you expect to see here? Your guess is as good as mine, since the communications landscape is constantly shifting. Nothing is fixed in this space, and just as video, SIP trunking, tablets, the cloud, etc., have been recent hotspots, other developments will inevitably come up as the year unfolds. I’ll certainly be examining these trends, but don’t be surprised when you see me shift gears and start talking about social media, 3D, big data, etc., as those topics come into sharper focus.

Before touching on my thinking here, I want to emphasize that my aim is to stimulate dialog. There are lots of topics to explore, but the best validation comes from INTERNET TELEPHONY readers. This magazine has a deep reach into our space, and beyond the daily news, my role is to give you food for thought. I want to challenge your thinking and look beyond the press releases.

Where is the market headed, and what’s driving that? How will that impact your business and your customers? How do you move on from the legacy world and find new ways to deliver value? Every question has a thousand answers, and I’ll provide a few, but I really want the rest to come from you. That’s when we’ll have some real dialog.

I’ll launch this column with a basic question to get you going – does dial tone still matter? If you’re from the legacy world, this may sound like heresy, but times sure are changing. Skype (News - Alert) really got the ball rolling back in 2004, and the momentum has been growing ever since. While desktop VoIP has largely been a consumer phenomenon, Skype and its ilk are routinely used in the workplace – sometimes to save the company money, but sometimes simply because it’s easier.

Of course, desktop VoIP is a complement to dial tone and not a replacement – very few businesses are brave enough to jump ship completely. The desk phone isn’t going away any time soon, but desktop VoIP has had a different impact by simply making the pie bigger. With no/low cost options, we become more inclined to make calls, but this activity isn’t typically using dial tone. Skype-to-Skype calls, for example, may traverse the PSTN at some point, but are not using TDM. Not only that, but so long as the calling experience is good, nobody really cares whether or not there’s dial tone.

To be fair, the likes of Skype and Google (News - Alert) Voice do offer PSTN connectivity, so you can certainly use these services with dial tone – both to make and receive calls. However, free beats paid 100 percent of the time, and these types of calls account for a very small portion of how these services are generally used.

If this was the extent of the conversation, you would be correct to conclude that dial tone still very much matters for business users. The installed base of legacy PBXs is massive, and there’s a lot of Centrex around, believe it or not. Even where IP PBX (News - Alert) is in use, most calls are still going over physical trunks, and dial plans remain firmly entrenched. However, while VoIP may be a big and disruptive technology, wireless is casting an even bigger shadow over the telecom landscape. Most of this impact has been with consumers, but with the explosion of tablets and smartphones, wireless usage in businesses has gone into uncharted waters.

Businesses have been struggling with managing cell phone usage for years now, and a whole new industry – TEM, or telecom expense management – has emerged to address this messy problem. In terms of dial tone, cell phones are just another channel in the voice mix, and at face value, this simply validates conventional thinking.

Fair enough, but that’s changing quickly, and mobile telephony will experience the same fate as landline once 4G and LTE (News - Alert) become the standard. That may be a few years away, but when you add Wi-Fi to the discussion, the use case for dial tone will diminish. My view is that within 5 years – 10 tops – all voice calls, whether fixed or mobile, will be packetized and routed entirely over IP networks. Most of this will be in the cloud, at which point there will be little need for dial tone except for backwards compatibility.

How do you like that scenario? This may not be welcome news, but that’s what I see coming. In my next column I’ll explore the implications further, along with some opportunities for both businesses and service providers.

Edited by Stefania Viscusi