As Copper Retirement Accelerates, Customers Feel the Pain of POTS Transformation

Enterprises and their IT teams are feeling the pain of migrating devices off POTS lines as copper retirement expands nationwide and prices skyrocket.

The closing of copper-based wire facilities by incumbent local exchange carriers (ILECs) is occurring at a fast clip following the Federal Communications Commission (FCC) granting forbearance to carriers in 2022.

AT&T in the last week has announced closures of copper feeder facilities in distribution areas in Kansas, Oklahoma, Texas, Missouri and Arkansas. Verizon on April 16 said announced retirements at two wire centers in New York. CenturyLink announced that it will shutter an Idaho copper facility on Aug. 26. In most cases the carriers say they intend for customers to migrate to a fiber-to-the-premises network in the affected area.

Publicly traded companies have been clear about the importance of getting customers off of highly cost-prohibitive copper and onto fiber.

"As our customer base continues to migrate to fiber from legacy services, our broadband support cost are decreasing, thanks to fiber's more efficient operating model, greater reliability, and higher quality service," AT&T CEO John Stankey said in a recent earnings call.

AT&T, Verizon and CenturyLink/Lumen get much of the press for their movement away from copper and other legacy services, but they're not alone. Even smaller LECs like Frontier are pushing copper retirement, Light Reading reports.

Related:As AT&T, Verizon Detail Cost-Cutting Measures, Partners See Opportunity

And customers are starting to take notice, often prompted by the bills landing in their inboxes. Businesses continue to see astronomically high price increases for their plain old telephone services (POTS) lines. Many partners report that their clients have seen per/line prices rise to $1,000. In different cases, long-time enterprise customers of the ILECs have elected to go to collections.

Chip Hoisington, who leads connectivity and colocation engineering for Avant, said his team has seen a PRI invoice totalling more than $19,000 for a single month.

"These bills are just getting signed off by the big companies before being caught at the accounts payable, controller and CFO levels," Hoisington told Channel Futures.

Spectrotel's Ross Artale

"The ILEC wholesale market is feeling the pressure of higher churn and lower revenues, and as a result, we are seeing unprecedented rate increases to presumably offset losses," said Spectrotel CEO Ross Artale said about 8 million business copper lines remain in the U.S., based on FCC data. "No one seems to realize the increases have an adverse effect, they only accelerate our resolve to transform customer, and we are moving tens of thousands of copper lines to next generation services."

But despite rising awareness of the need for businesses to mitigate the price increases, many organizations are floundering in their responses. Some didn't transition their services in time to avoid the big bills. Others have attempted a POTS transformation but failed in their initial deployment. Still, IT teams are learning a painful lesson about the nuances that come with specialty lines.

"There are so many pieces and so much that has to go right for POTS transformations not to get real nasty and blow up," said Mckay Noel of Elite Telecom Solutions.

Some IT teams and building managers who are on the hook for these copper lines are feeling paralyzed about next steps, D&M Enterprise president Steve Gerhardt said. Gerhardt said that while POTS may be old, it functions reliably for businesses. IT leaders worry about pivoting away from a proven technology.

D&M's Steve Gerhardt

“We understand why carriers are increasing the pricing because they want everyone off the analog network. I get it. But some of these customers are afraid to make the change. They don't know what to do, because they're scared, and they don't understand the technology," said Gerhardt, whose IT consultancy helps businesses navigate POTS transformation. "Some customers technology has passed them by. They know what works, and they don't want to make a change because if they make a change and it doesn't work, people get fired.”

It's hard to fault IT leaders for not thinking about POTS in a time when they are tasked with determining strategy for so many other technologies, MetTel senior vice president of channel Tim Hanley said. Why focus on copper instead of cybersecurity if the copper is working just fine?

"As archaic a technology as POTS lines are, they're probably the most stable technology that we have in our business. Short of a pole going down in the road, they typically just work," he said. "And what often happens is, expenses get overlooked because businesses are managing a lot of different things. And if there isn't that event where I get a letter from Verizon saying, 'Hey, this is being sunseted,' it just just kind of works."

Gerhardt's team initially works to move the end customer's line from the ILEC's bill onto wholesale agreements that aggregators hold. This stabilizes prices and allows for the customer to consider a more long-term solution like POTS-in-a-box.

“[After taking control of the POTS lines] Once the carrier becomes the carrier of record and have ownership of the phone lines," Gerhardt told Channel Futures. "From there, the switch to POTS replacement is smoother and cleaner and makes a much easier transition.”

Course-Correcting

Copper retirement has become a marketer's paradise for vendors and consultants, many of whom incorrectly proclaimed in 2022 that the FCC had ordered carriers to shut off copper facilities.

Now with POTS line price increases capturing the attention of IT leaders, customers are once again wading through marketing messages. The partners who source POTS transformation say they are seeing key differences emerge in the providers who say they can conduct migrations at the enterprise level.

"We saw an uptick in companies that touted, 'We're experts at POS replacement,'" Noel said. "I think there was a winnowing of those. Because once you really get into it, you realize, 'My eyes were bigger than my stomach on this one.'"

Hoisington said some POTS-in-a-box providers needed to recalibrate their offerings.

Avant's Chip Hoisington

"When the ruling first came out, service providers were extolling the merits of their offerings, so we began selling these solutions. We had three providers pull their offering back and tell us they were not ready, as the implementations were much more difficult than expected," Hoisington told Channel Futures. "This was because many of these are specialty lines used for fire alarms, fire panels, and elevators. Some of the fire alarm systems are 50-plus years old."

Those challenges led to Avant establishing best practices for its supplier partners on POTS transformation, including that providers have a default of two truck roll and extend implementation time to include site surveys.

Due to the complexity of an enterprise POTS migration, Gerhardt said D&M heavily scrutinizes the capability of potential aggregator partners to handle a nationwide project. Specifically, Gerhardt said he asks providers about the size of their largest account.

“There's a difference between 500 locations and 2,700 locations. There's a big difference with support. The customer alone has anywhere between 60 and 80 trouble tickets a day. It's a lot, and if you only have an account that has 500 locations, it's a different mentality. You must know what aggregators/carriers who can support an account of this size. If you do not choose the right aggregator/carrier, you put your customer's business in jeopardy," Gerhardt said.

Copper Retirement: Specialty Lines

Hanley pointed to a gap in how enterprises understand the state of their own POTS transformation. Namely, many businesses overlook specialty copper lines that support equipment like fire and burglar alarms and elevators. These modem-based lines come with compliance requirements for redundancy that don't exist for regular voice services. Generally these requirements are dual connectivity and dual power backup, Hanley said.

"There have been hundreds of these conversations in the past year where we speak with an IT professional at an organization and talk about the challenges around POTS lines, and they're like, 'Well, we've already moved to VoIP; we don't have this issue,'" Hanley told Channel Futures. "A lot of big organizations have had some sort of technology strategy to move to UCaaS/CCaaS. But what of all of those remaining lines that the 8x8s could not port over to their VoIP network? What are you doing with those?"

MetTel's Tim Hanley

It's those specialty lines that are causing the biggest headaches in POTS migration, Hanley said.

Use Case: Extra Storage

Technology advisor Elite Telecom Solutions introduced Extra Space Storage to MetTel after a series of unsuccessful attempts the self-storage provider made to move its POTS lines. Noel said the publicly traded company had tried to partner with at least four different telecom aggregators, having worked with most of them directly.

Acquisitions have helped Extra Space grown its market position in recent years, but they have also prompted IT and building managers to evaluate its growing real estate and technological footprint. The company now maintains more than 2,000 locations, all of which contained a myriad of copper lines that were or weren't in use. Owing to the nature of self-service location– whose many storage units give it almost a residential dynamic Extra Space was not focused on transforming its regular voice and internet services, but instead the lines supporting its different alarms. The sunsetting letters were coming at the company one after another. Price increases had led to the company spending "about $100,000 a month too much" on POTS, Noel said.

However, replacing the lines for Extra Space's fire, security and elevator alarms was a high-risk endeavor.

Downtime on those lines would be unaffordable for Extra Storage, Noel said.

"If that fire alarm is down for a second, the fire marshal of that town knows it, and then he's all over that store. He starts the clock on a $1,500-a-day fine until they get that remedied," Noel said.

Furthermore, keep in mind that neither the ILEC nor the aggregator created the actual fire alarm or security camera. Noel said at least 30 different security providers exist in Extra Space's footprint.

"The MetTel project manager has to coordinate not only the installation of the MetTel equipment, but making sure that the other providers have up to date gear on the site as well so that it all functions," he said. "So much has to come together."

Noel said Elite found MetTel to be reliable in project managing all the moving pieces.

"There are multiple vendors involved in every one of these implementations. They're dispatching hundreds of techs. They have hundreds of locations a day. It's a war room. There's a lot of pieces on that board, so you have to have a good quarterback to synchronize all that and keep it moving," Noel said.

Following the successful transformation, Extra Space rewarded Elite and MetTel with opportunities to help it with managed mobility and a transformation of its internet connectivity.

Tips for Partners

Hoisington encouraged technology advisor partners to educate their business customers about the state of copper retirement. It should be a topic of every call with customer network teams, and clients who ignore the problem should be pointed toward their bills, Hoisington said.

He said different Avant TAs have established engagements worth more than $50,000 in monthly recurring revenue due to them becoming thought leaders on POTS.

And thought leaders know how to expand the conversation beyond pricing matters, Hoisington said.

"For example, say the elevator maintenance fees have increased to $800 per month. It's important to address the cost, but it's also crucial to consider that the service may not be immediately available if the elevators break down. This could lead to serious issues, such as someone having a medical emergency in the elevator and the emergency call button not functioning. What was initially a high bill for a few months could turn into a $1 million problem," he said.

Hoisington also urged partners to help their customers "get ahead of production."

"These lines will need replacement, and it's important to avoid a situation where customers have to wait three or four months due to a rush for replacements."