Rural telcos are adopting VoIP, but it’s a slow go. According to the NTCA’s latest survey, just one-third of members have a VoIP service offering. Today’s legacy networks are dangerously obsolete and telcos need to move to next-gen IP solutions. Cloud sourcing next-generation VoIP infrastructure can help telcos migrate to IP faster in order to deliver a better experience to their customers and realize impactful financial and operational improvements.
Last week the NTCA–The Rural Broadband Association released its 2016 Broadband/Internet Availability Report. All the 2016 survey respondents offer broadband but only 33% of survey respondents currently offer VoIP service to their customers. While this is up slightly from 31% in last year’s survey, it’s still low given we are two decades into this PSTN to IP transition and the rural telco market doesn’t match the broader US VoIP adoption.
According to the FCC, of the 123 million wireline retail voice telephone service connections, 49% are VoIP, the closest it’s ever been to overtaking traditional POTS/TDM lines (read more in Voice Telephone Services: Status as of June 30, 2016). The tipping point is very soon, if not now.
It’s moving in the right direction (the 2013 survey saw 19% of respondent telcos with VoIP services; see more in Rural Telco Transformation with the Cloud). And more will adopt: 47% of the 2017 survey respondents not currently offering VoIP have plans to do so in the foreseeable future.
There are a number of reasons for the slower VoIP adoption (it’s a hard costly endeavor, challenging to find employees with skills, funding other priorities, regulatory burdens, etc.). But why should telcos move faster?
- VoIP is a perfect complement to the FTTH broadband networks the telcos are building. It provides new features and lower costs to their customers.
- Revenue increase from business VoIP for hosted PBX and SIP trunking.
- Address the growing rural competition from electric co-ops and municipalities deploying fiber broadband portfolios not to mention the OTT players.
- The TDM network is end-of-life and soon the skills, parts and perhaps the vendors to keep it running will no longer exist.
- Telcos can fund growth initiatives priorities (e.g., FTTH, new services, market expansion) that require significant investments and human resources.
The latest VoIP technology craze—building a new network based on Network Functions Virtualization (NFV)—isn’t the answer for NTCA telcos. NFV-based VoIP is even more challenging than today’s soft switch VoIP and does not deliver the right business outcomes (read more in Evolving Voice in the NFV Era and Road Maps to Virtualizing Voice).
I can’t discount the regulatory and subsidy issues that create friction for a wholesale change from network-based VoIP to cloud-based solutions. It plays into the business case. But we are confident that regulatory and NECA rules will change in coming years that enable a cloud solution to provide a complete telco VoIP solution covering all use cases.
Cloud Accelerates VoIP Migration
Continuing to operate TDM is fraught with risk with end-of-life equipment, rising cost per user, and zero feature development. Softswitch and VoIP 1.0 approaches are not much different, and the cost savings are not compelling enough given the state of voice markets.
At Alianza, we’ve argued that for most service providers—including NTCA member telcos—the best approach for VoIP and UC is to use a turnkey, integrated virtualized software solution delivered via the cloud (vs building your own NFV-based IMS cloud). That’s what we call a cloud voice platform.
Instead of buying disparate elements, integrating them, and running a new network, telcos can get their next network as a SaaS solution. The cloud voice platform accelerates that transition and does so with a superior cost model and a more elegant, easier-to-manage solution. Voice becomes an app delivered over telco broadband networks without requiring the cumbersome infrastructure.
The cloud voice platform enables a number of telco growth strategies and cost-reduction initiatives including launching new business VoIP services and replacing the switching infrastructure to run POTS (read more in our ebook Telco Transformation: Voice Moves to the Cloud).
About the Survey
NTCA–The Rural Broadband Association represents nearly 850 rural telephone companies in the United States. For nearly two decades, NTCA has conducted its annual member survey to measure broadband and advanced services deployments and challenges they face. In the spring of 2017, 172 members responded. The average survey respondent serves 4,723 residential and 1,463 business voice grade access lines. Read more in the 2016 Broadband/Internet Availability Report.