Analog Circuit Replacement – The Beginning of the End for the PSTN

By: Dan Belmont

The big carriers have already started to sunset the Public Switched Telephone Network (PSTN) with reduction of support, increase in costs, and elimination of a replacement.

The carriers that have historically made an investment in analog telecommunications are now asking: How can we exit the analog circuit business and when can we eliminate support for this service?

History of analog circuits and use in utilities. To say that the traditional phone network is aging would be an understatement. Much of the network, like a lot of our grid infrastructure, has not changed fundamentally since the Electron Switching Systems that were introduced around 1965. With the proliferation of IP communications carrying data and VOIP over wire, fiber and cellular networks, the need (and profit) for traditional land lines is vanishing quickly. Copper will not go away anytime soon, but the traditional PSTN will be going away well before the end of the decade.

What does this mean? The infrastructure is now considered out of date; carrier revenue for these circuits is declining at an exponential rate; and the maintenance costs continue to increase as the equipment ages.

As the diagram below shows, copper will continue to be a viable last mile for connectivity to the home for digital communications in the form of DSL, VDSL, etc. The problem arises in the support for the analog circuits that run over that copper. Technical support is already being reduced in many areas from 24/7, now to business hours with the end goal of complete elimination in the next couple of years.

Analog Circuit Replacement

Current industry trends. The Federal Communications Commission (FCC) is closely involved in this process. Currently, there is a Technical Advisory Committee (TAC) made up of industry leaders and FCC officials that have been working on the “Sunsetting of the PSTN Network” since 2010. The studies done by this group have concluded that the problem with the aging PSTN network is already here and growing quickly.

As of 2011, 25 percent of U.S. households do not have a PSTN phone line in use in their home and most estimates indicate that by 2018 less than 6 percent of the population will have a PSTN line. This creates the inevitable situation where revenue is declining, costs are increasing, and better feature-rich alternatives are available, which collectively puts the legacy system on a fast path to complete elimination.

PTSN phone line use graph

Steps to turn off the PSTN. The fight against VOIP by the large carriers is no longer an issue. Remember the days when the carriers tried to litigate Vonage out of business 10 years ago? Well, the fight to crush VOIP is long over. They’ve lost the battle with their competitors and regulators and opened the door to the additional features of VoIP and triple play packages that the cable companies have added to their offerings. The carriers have realized that they cannot shore up the investment in this crumbling infrastructure with the steep decline in revenues. They are quickly moving to the more feature-rich IP environments of broadband, fiber and cellular LTE. Last Mile U-verse, For example, goes over the copper but is VOIP on a data network for your voice services. PSTN is no longer needed to provide quality phone service.

AT&T CEO, Randall Stephenson, made these remarks at a Goldman Sachs Conference on September 19, 2012: “You don’t go out and put in LTE capability in rural America and leave up all your copper infrastructure in the long haul, it just wouldn’t make sense to do both. So this is the big regulatory issue. The FCC would require us to leave that copper and TDM fixed-line infrastructure up by some mandated rules and you can’t do both. You can’t support both infrastructures. We have got to work through the regulatory implications of this, but I think LTE can prove over time to be a fixed line replacement in rural and less dense populations. I think in a five year time horizon that can become significant.”

The carriers in the TAC group have already been lobbying for the FCC to set a final date for turning off the PSTN system altogether. Although this is its goal as well, the FCC has to work to ensure that all services used by the public would be given a viable alternative and that rural areas do not get stranded without coverage. There is a Carrier of Last Resort (COLR) designation that the major carriers have to comply with. Under this stipulation the carrier is required to provide telephone service to all areas and any customers that request it regardless of economic viability. The carriers are working to move this COLR designation over to their cellular networks nationwide since they have been successful in convincing a handful of states already.

In the latter half of 2012, the FCC acknowledged that the investment in two competing networks does not make sense and that the focus should be directed toward one that would produce better features and capabilities for the entire country. State regulators have begun to agree by granting wireless the COLR designation in several states. This has prompted AT&T and Verizon to allocate incremental investments into those specific states.

What happens if I do nothing? If you want to continue to use your analog point-to-point circuits you will have to hire your own telecom technicians, develop relationships, and access rights with the carrier’s central offices that your circuits go through. You will also need to maintain your own point-to-point communications along these networks. Further, you will have to deal with less reliability as the core networks continue to reach the end of useful life and break down. This will only prolong your ability to use this network. It will not eliminate the issue of eventual termination, at which time you will have to migrate to an alternative wired or wireless solution in LTE, fiber, IP based cable or DSL, etc.

Please call Al Sample, Strategic Communications Consultant, Active Telecom, 816-589-9838,

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