Business Phone Systems: What is a POTS Line and Why is it Setting Telecom Bills on Fire?

Business Phone Systems: What is a POTS Line and Why is it Setting Telecom Bills on Fire?

Haven’t heard the term POTS line before?  What about PSTN, also known as the public switched telephone network?  If you haven’t heard of either, that’s okay.  Unless you’re a telecom nerd like I am, they’re probably not words you have in your lexicon.  But, if you’re still utilizing traditional business phone systems, it’s never been more important to know what POTS is.

Originally, the system was called the Post Office Telephone Service but is now referred to as Plain Old Telephone Service.  POTS lines are old-fashioned copper wires connected to a standard telephone that provides the power and connectivity to the telephone service provider’s central switching system.  In other words, POTS lines are traditional analog phone service businesses use for voice, fax, DSL, and alarm lines to name a few.  PSTN is essentially the same thing but I like to throw that in the mix to satisfy all my fellow telecom geeks out there. 

POTS Pricing Moves to the Dark Side

POTS lines have been the standard voice-grade telephone system since March 10, 1876 when these iconic words were uttered by Alexander Graham Bell:  “Mr. Watson, come here – I want to see you.”  But there’s been a disturbance in the force and POTS business line costs are skyrocketing.  In some areas of California, for instance, costs for POTS have risen 458% since 2016!  

Why the pricing insanity?  Although it’s tempting to blame corporate greed, there are several different factors that play into the pricing structure surrounding business phone systems with POTS lines.  For starters, setting up POTS line business phone systems can be expensive.  Additional features like intercom, group ringing, call transfer, call queuing, and phone directories must be paid separately.  Throw in the labor costs of having a technician do the installation and maintain the infrastructure and the prices start adding up quickly.    

We can’t talk about POTS line pricing without mentioning the sweeping advancements in technology.  With the explosion of online communication channels and social media, voice calling is not as popular as it used to be.  How many times have you picked up a traditional phone in the past month to call a colleague versus sending an IM or utilizing your mobile device?  This shifting tech culture has driven many businesses to make the move away from analog telephony.  New technologies in the market like VoIP (Voice over Internet Protocol) and wireless can now offer telephone services at a much lower cost than POTS.   

Business Phone Systems and the Copper Meltdown

The telecom giants are feeling the heat when it comes to copper and they’re actively working to disengage themselves from an expensive, revenue shrinking system.  AT&T reported that their Business Wireline segment shrunk revenue by 6% and EBITDA by 8% in the fourth quarter of 2020.  There are several reasons why telecom companies like AT&T, Verizon, and Sprint are petitioning states, one by one, to unplug the old telephone system. 

  • Copper infrastructure is aging and it’s too expensive to improve.
  • Technicians with the necessary experience to support and maintain the lines are older and many are retiring.
  • Replacement parts are prohibitively expensive and difficult to acquire (if they’re even available).
  • Carriers have shifted focus away from copper and have invested heavily in the rollout of their fiber networks, which offer faster speeds, more sales opportunities, and a host of additional services.
  • Customers are “cutting the cord.” In 2004, over 90% of households in the U.S. had an operational landline phone, according to data provided by the Centers of Disease Control and Prevention. Today, that figure has plummeted drastically to about 40%.
  • With fewer customers, POTS services are no longer a revenue driver.

All of this has caused carriers to rethink their strategies and that is having a huge impact on business phone systems with POTS lines and their telecom bills.  Many carriers are refusing to sign contracts, raising rates to astronomical levels, or ending service altogether.  Recently, AT&T notified some customers that they need to find an alternative to their TDM (time-division multiplexing) services by the end of July 2021 due to a sunsetting of services.  Other carriers, such as Verizon and Sprint, have also given customers the same notice. 

Putting out the POTS Line Fire

Before you change your entire telecom strategy and abandon POTS lines completely, it’s important to remember that analog lines have other uses that are not easily served by digital, at least for now. 

  • Modems for remote access
  • Fax machines 
  • Out of band backup
  • Elevators (emergency phones)
  • Alarms
  • Remote access to your legacy private branch exchange (PBX)
  • Credit card machines
  • 911 access from a location

So, what should you do? Controlling telecom costs now and preparing for the future can help eliminate the pain caused by POTS line pricing and keep your organization running efficiently, for both your employees and customers.

Take Stock of Your Inventory

Seeing inventory that is categorized by type, and linked to locations, invoices, contracts, cost centers, departments, vendors, orders and employees – across all carriers – can give you visibility into what you have, where the lines are located, who is using them, and how much it’s costing you.

Eliminate Phone Lines

After your inventory is complete, get rid of phone lines that are no longer needed, have limited usage, or that can be switched to a cost-effective digital alternative.    

Re-price Your Phone Lines

If most of your POTS lines are with the same phone company, Tangoe’s relationships with the major telecom carriers means we can contact your carrier account rep and inquire about volume pricing or discounts that may be available. 

Eliminate Unnecessary Phone Features

Phone features like call waiting, call return, and unknown call rejection can add hundreds or even thousands of dollars to your telecom bill and you probably don’t need them on a business phone line. 

Automate Your Invoices

Tangoe’s Telecom application provides standardized and automated end-to-end management of telecom invoices from initial receipt through loading, cost center allocation, Accounts Payable/General Ledger (AP/GL) reporting, and payment remittance to vendors.

Audit Your Bills

It’s essential to review your business phone bills each month, especially if you’re receiving your service from the local phone company.  A thorough audit can help you be on the lookout for third party billing charges.  Don’t have the time? No worries, Tangoe can do it for you. Stop paying fees for unwanted services you didn’t ask for.

Transition to New Technology

It’s only a matter of time before you’ll have to transition so start planning and strategizing now.  Switch to eFax or find ways to move to fiber-based services.  Consider converting your POTS line to SIP (Session Initiation Protocol) or, if you have more than 10 phone lines, a PRI (Primary Rate Interface). Network your offices by utilizing MPLS (Multi Protocol Label Switching). Unsure of what any of that is? We do and can help you make data-driven decisions that are right for your business.

Tangoe Can Help

There’s never been a better time to engage with our veteran technology consultants that specialize in cost reduction and contract negotiation.  Our expertise means that we can help you easily identify legacy services, recommend new, less expensive services, provide guidance on competitive market rates, and negotiate with carriers on your behalf.  Our data and knowledge will help build a long-term telecom strategy and help you put out the POTS line fire.

We make telecom expense management (TEM) and lifecycle management easier and less stressful. Our application’s integration, automation, and reporting power gives you the power to make insightful and informed decisions. Connect with our experts today.