Landline Decline Means Decision Time for Businesses

Consumers increasingly are abandoning legacy telephone service as more than half of U.S. homes had only wireless service during the second half of 2017, up 3.1 percentage points since the second half of 2016.

That’s according to data from the National Center for Health Statistics (NCHS). And there’s plenty of other evidence that legacy telephony is on the decline.

The decision to ditch landline and go strictly mobile is an easy one for consumers. For businesses, however, it’s not so easy.

We spoke with Amr Ibrahim, CEO of Ultatel, and Jon Arnold, principal analyst at J Arnold & Associates, about the issues businesses face when deciding whether to replace their landlines.

Ultatel’s Amr Ibrahim

“CBS reported that 20 states’ lawmakers are allowing the vote on if AT&T can end landline services to solely provide wireless or internet-based phone networks,” Ibrahim said. “We have passed the threshold of individuals now owning cellphones in comparison to landline devices. Statista reported earlier this year that less than 44 percent of people have a working landline phone in their household and 52.5 percent have a working cell phone. The proof is in the statistics and landlines are on track to be fully phased out by 2020.”

Businesses are slower to move away from landlines because there “really aren’t better alternatives for a primary mode of voice communications,” Arnold said. Telephony is still the best, but as with consumers, the  alternatives are impacting the business environment, he said.

“Wireless is kind of the big alternative, but it’s not a practical replacement for a switched phone system,” he said.

To stay ahead of the competition and keep their organization running smoothly, businesses must address their future communication needs now, Ibrahim said.

Jon Arnold

“Technology has evolved and produced new solutions that enable businesses of all sizes to easily have remote teams that can still efficiently communicate and collaborate as if they are sitting in the same office,” he said. “With the increased competition on businesses, business owners need to acquire the top-of-class employees that will keep their business competitive. Looking for these types of workforces locally can be hard in some areas. Having the infrastructure that helps you construct (a) remote team makes it easy for business owners to seek talents in far distance than their office locations.”

Many applications extend PBX capabilities to mobile phones, but they have to be set up, Arnold said. Mobile phones aren’t purpose-built to be switched phones, so it’s a good alternative, but not an outright replacement, he said.

“The other basic option is the softphone, which is convenient for a lot of scenarios where a landline isn’t accessible or practical to use,” he said. “So the difference between a softphone and a web VoIP application like Skype is that a softphone basically replicates a feature set of a PBX on your screen. That’s an application that can make a lot of sense. It also has a little more flexibility in terms of the way you can interact with it because you can use your built-in PC features, microphones and cameras, and you can use peripherals to have a hands-free experience.”

However, softphones have never really caught on because …

… they’re a little clunkier, and don’t have the same physical feel and familiarity as a desk phone, and not everyone is using a PC everywhere, Arnold said.

Ibrahim said cloud-based VoIP systems are being considered the future for both large- and small-scale business communications. With technology being used to enhance business efficiency and quality, cloud-based VoIP phone systems offer advanced phone-system features and a unified workplace phone system that works where the team works, he said.

“VoIP also eliminates the need for high priced equipment — for startups, entrepreneurs and small businesses (the backbone of the U.S. economy), that is significant,” he said.

In terms of security, a legacy phone system is a separate, dedicated network that runs independent of or parallel to the data network, so it’s not likely to get hacked and it’s not really that valuable to hackers, Arnold said.

“When you move from legacy to IP, voice is running on the same network as everything else because it’s a data application,” he said. “Now it’s just one of many streams on your data network and now your phone system is a more interesting target for hackers. So if you’re lazy or negligent, then hackers have an easy entry point. And they’re not doing it to eavesdrop on your calls … but they can use your phone system as a point of entry to your data network where they’re after bigger things.”

In addition, people often are using mobile phones in Wi-Fi network settings, so if your calls aren’t encrypted, there’s potential there for mobile calls to be tapped, Arnold said.

“And the pitfall for softphones is if the utility factor is pretty low, it may be hard to justify the cost of having it,” he said. “When you subscribe to a VoIP service, it’s going to be an extra $10-12 a month or whatever to have a softphone on an endpoint,” he said. “And if people aren’t using it, then it’s a bit of a waste of money.”

And with the phone market rapidly consolidating, there are fewer players. If you’re using a phone vendor that’s not a household name, “it’s possible they may not be there two to three years from now,” Arnold said.

For the channel, the market is moving to a cloud-based, hosted SaaS model in which customers lease instead of own and consume as they go, Arnold said.

“The second thing is as telephony becomes more of a cloud-based application, it’s going to have less value as a standalone sale or application,” he said. “It’s going to be tied more and more to UC CPaaS platforms where it’s built in to a whole solution. That’s a different kind of a pitch or value proposition.”