POTS - R.I.P. 2008

My first real full-time job was in 1978 at Illinois Bell (yes, Fish Head has out-lived the average alewife by a few years). At the time, IBT was one of the largest and best known corporations in Illinois, and made hundreds of millions of dollars each year selling POTS - Plain Old Telephone Service.

Flash forward to 2008. Illinois Bell is a distant memory, divorced from the Bell System, subsumed into Ameritech, which was subsumed into SBC, which subsumed AT&T. Get it, got it, its gone.

And how about POTS? It too is rapidly disappearing. Depending on whose numbers you believe, installed POTS lines are declining 5-10% per year. Why? In the recent past, its been wireless and broadband that have been cannibalizing the POTS business. Younger consumers, especially those who remain single longer, are comfortable relying on their cell phones and see no need for POTS; tech-savvy oldsters who like their stationary phones have been exploiting their broadband connections and using services like Vonage and Skype.

More recently, the economy has been the culprit in the decline. Empty houses require no POTS line, and families with financial pressures will ditch their POTS line before they ditch their mobile phones.

At a rate of decline of 10% per year, POTS service is likely to rapidly become un-economic, as it requires specialty equipment and infrastructure which will be hard to maintain in a rapid down draft, and consumers unwilling or unable to switch are likely to face difficulties as telecom companies react to the financial realities.

The Fish Head recently retired his trusty POTS line that served his home office. After many years of faithfully paying $18 per month to the local phone company, Fish Head has converted to a combination of cell and VOIP. For routine calls, Fish Head uses Skype, an ultra-low-cost VOIP provider which primarily runs on personal computers. Couple your PC with a bluetooth headset, and you have a high-tech if somewhat inconvenient phone system. For cell, Fish Head routes his cell calls thru a femtocell which in essence turns home cell calls into VOIP.

And so AT&T is out $18/month, the Polycom desk phone sits collecting dust on a shelf, and the Fish Head has made his little contribution to the decline of POTS.