Survey Finds 'Death of the Landline' as Most Disruptive Force to US-based Communication Services

By Peter Bernstein November 29, 2012

The words “disruption” or “disruptive” have become so commonplace in tech discussions these days that they are almost cliché. Whether used as descriptors of the impact of such things as virtualization, the cloud, BYOD, etc., or of the actions of those who are using the Internet to disintermediate traditional markets such as what Amazon, Apple (think iTunes) and have pioneered, “E”verything seems to be disruptive. However, sometimes the term is very apt to describe the impact of an event. Such is the case regarding a new survey released by inetwork, a division of Bandwidth a North Carolina-based provider of scalable voice, 9-1-1 and SMS solutions. Done by research firm ATLANTIC-ACM to better understand the disruptive factors and trends U.S. wholesale voicebuyers think will most impact their businesses, 74 percent of respondents said, “Death of the Landline.”

Have your attention? They certainly had mine. 

End of the (Land) Line

This may not strike you as big news. After all, we are aware of such things as: the looming death of the public switched telephone network (PSTN) as determined by none other than the Federal Communications Commission (FCC) for before the turn of this decade; the growing number of people who have foregone a fixed line phone for a mobile only way to contact them; and, the growing use of VoIP capabilities. However the numbers do tell a striking story about the dramatic changes in how service providers will offer – and end-users will consume – telephony services. Key findings tied to disruption in the communication services market include:

  • 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.
  • 72 percent of respondents placed the migration to 100 percent VoIP over long-term evolution (LTE) as a close second in market disruption, representing the continued blurring of the lines between wireless carriers and VoIP service providers.
  • 70 percent of 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.
  • Nearly half of 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) perspective will more aggressively compete in what has historically been the domain of a relatively small number of traditional dial tone providers. 

“While certain resellers will claim there is still money to be made in Plain Old Telephone Service (POTS), the overall market continues to decline,” said Dr. Judy Reed Smith, CEO of ATLANTIC-ACM. “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.”

APIs for Phone Services

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.  The embedded infographic not only highlights the findings from above but also the importance of APIs.

Steve Leonard, executive vice president and general manager of Bandwidth’s inetwork division sees the results as a validation of his company’s focus: “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 apps’ for IP-enabled mobile devices, call analytics purposes, rich media, social networks, limited only by their imagination…The survey results prove that the ‘phone’ as we know it, and the telecom industry in general, are pushing the boundaries into an entirely new phase – one that inetwork is uniquely positioned to support.”

While the landline may be dead or dying, reality is that voice is very much alive. Whether it is being provided through APIs to wholesalers by Bandwidth's inetwork, or being embedded for real-time communications through web browsers by such efforts as WebRTC, despite hand wringing that the younger generation does not make phone calls voice interaction is very much alive. In fact, I consider the coming age of video being driven by WebRTC and the use of video chat services as not the death of voice but its reincarnation. 

 Will this be disruptive? You bet. 

Are landline phones going to go away? Hardly!

At the end of the day, that Wi-Fi enabled smartphone or softphone on your tablet is going to be connected to a router that is connected to a cable (hopefully fiber optic) from a “fixed” service provider. The term “landline” is a term that ultimately, like “telephony” and even “telecommunications,” probably needs to be retired, but getting services from terrestrial networks will always be a critical piece of how we communicate. 

Mr. Leonard got it right in noting that the world is changing and very rapidly and that those traditional providers who do not adopt and seriously consider using API to embed voice wherever they can, will count themselves in the ranks of the disrupted rather than disrupters.   It is in the end “their call.”

Edited by Stefania Viscusi
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