Will Copper Phone Lines Be Killed By VoIP?

Not So Fast, We're Not Dead Yet!

I've written before about copper phone lines and VoIP technology, and continue to be interested in both, and the complex transition occurring. It's one of those situations where the shift to digital is not quite a no brainer like it was tossing out the cassette tapes for CD's, or VHS for DVD's. Anyway, I found this article:

Grant Thornton, an expert analyst in the business and finance industries, has issued a report stating that VoIP services are going to continue to grow rapidly and pose a threat to traditional telephony in just a few short years. Citing a four-fold increase in VoIP subscriptions over the past two years, he predicts that the VoIP market will see over $25 billion in revenue by 2010.

For the current offerings, I think we can all agree on some basic points about plain ol' telephone service (POTS) over copper lines: it's overpriced for what you get, it's definitely overtaxed, it's proven technology, it has an aging infrastructure that is not being maintained, it's 911 works the best, and it is the "gold standard" for voice quality that all else gets compared to.

I think it's more than safe to say that there will definitely be less subscribers to POTS as the years pass. Despite the quality advantages, and proven technology, it's simply not enough value. Cell phone penetration has reached very high levels where there are multiple phones per household, all with included long distance and caller ID thrown in. I already make all of my long distance calls on my cell phone, and despite my incessant grumblings about T-Mobile, I will throw them a bone here and say that their voice quality is just as good as my landline, and so if I had a plan with more minutes, I could consider ditching the home phone.

If Verizon wants to wonder why folks are ditching their landlines, they need to look no further than their pricing. Copper phone lines are quite a la carte. I was paying, with the taxes, just under $25 for a single phone line to the house, with nonpublished service. I had no long distance to avoid another charge, whether or not I used it. The Caller ID that I really wanted was $8 monthly. I had a local calling plan where I paid for each call, but within the county they were not timed then, although calls to the next county, less than 10 miles down the road were charged by the minute! Hence, why I use my cell phone for such calls, and use the Verizon line for mostly incoming calls. To get a better plan, such as unlimited long distance, ran a friend $60 monthly, which is quite ridiculous these days given the competition (she ditched it and went to cable just last month). On top of this, Verizon isn't maintaining their copper infrastructure, in favor of fiber optic, so expect some down time, as I experienced last year. Finally, Verizon is heavily marketing for their Fios offerings, and making it nearly impossible to go back to copper once the fiber gets hooked up. By doing this, they also trade folks up to a higher priced monthly plan, coincidentally, just when more "affordable" unlimited monthly cell phone plans are rolling out. Not to mention services such as T-Mobile's HotSpot at Home which is unlimited VoIP, but cleverly marketed more as a cell phone so it probably has higher consumer acceptance.

However, given all of these forces against traditional copper landlines, I still don't see them going away overnight as some are predicting. For starters, not every household has a broadband connection, or even access to a broadband connection, particularly in rural areas. On top of that, many folks have affordable DSL as their broadband, and in most cases that requires a landline as well to get (Verizon has millions more DSL customers than Fios folks). There are also plenty of folks that don't change their services, and don't reevaluate periodically, particularly among the senior set. They've always gotten their phone that way, and if it ain't broke they're not gonna look to fix it, or try anything new. As homes turn over, and new services are selected, clearly copper lines are on the decline, but this could take many years to accomplish the transition. Incidentally, the digital TV transition may be hastening things as folks (such as myself) sign up for new digital TV services, and end up getting forced into triple play pricing for the best deals.

So, how will this all work out? I think it could take 20 years for copper phone lines to go away. Perhaps future technologies will change the rules of the game. How about broadband and telephony over satellite? For that matter, what about a Skype like service over nationwide WiFi hotspots or WiMax? And who knows what the wireless spectrum auction might bring in terms of new services? While the future is not copper, this is all going to take time to sort out, and lots of it.