VoIP Innovations and the Exodus from Traditional Phone Services

Business subscriber levels for traditional telephone services (Plain Old Telephone Services – POTS) are falling due to the emergence of Voice over Internet Protocol (VoIP), a cloud-based voice service that offers all of the same features as POTS, with the addition of new features such as call and customer analytics.

VoIP adoption has been growing steadily over the past decade, reaching a business penetration of 20 percent in 2014. The reason for this shift is mainly innovation in cloud-based calling – or a lack thereof in traditional phone services: telecom companies no longer see the benefit of investing in innovative products and services for POTS, but are rather investing in increasing Internet access speeds through fibre-optic cable investments. VoIP service providers are able to leverage the high-speed data transmission capacities of Internet infrastructure to outcompete POTS service providers in service delivery, call quality, and platform innovation.

The advantages of VoIP over POTS can be characterized by scalability, portability, and cost savings. VoIP is scalable because, in most cases, companies can start using cloud-based calling services by simply plugging existing phones into Internet wall ports. This makes it simple for companies to transition to VoIP at any scale, since the equipment and the calling bandwidth are already available.

Portability arises from the fact that once a company subscribes to VoIP services, it can access the cloud-based calling platform from any location with a high-speed Internet connection. For example, BullsEye recently hosted the phone services for author Mitch Albom’s S.A.Y. Detroit Radiothon. The Radiothon took place in a local mall without the proper infrastructure for the temporary installation of traditional telephone services. The solution was clear: we deployed a VoIP phone solution using the mall’s pre-existing broadband network and VoIP phones that were brought in for the event and subsequently removed. Needless to say, the event went off without a hitch.

Cost savings are typically realized immediately upon switching to VoIP. The average cost per business telephone line was $141 per month in 2013, while the average cost per VoIP business line was just $66. This cost difference of roughly 50 percent is expected to persist through 2017 as VoIP adoption continues to grow. Also important to note is the fact that VoIP costs include broadband Internet costs, which most companies (89 percent, in fact) already incur.

The quality of VoIP services is growing as communications infrastructure advances: improvements in Wi-Fi and cellular data connection reliability and speed have made it possible to carry out VoWiFi (voice over Wi-Fi) and VoLTE (voice over Long Term Evolution) voice calls. The option of conducting voice calls over Wi-Fi presents new opportunities to improve call quality and lower costs by reducing strain on mobile towers. Moreover, the integration of VoIP with VoLTE could add an additional layer of flexibility to VoIP customers, making it easier than ever to stay connected away from the office.

To read more about innovation in voice calling services and in particular the financial implications of transitioning from POTS to VoIP, please check out our business article: The Evolution of Telecom and the Financial Impact on Business.

1 TIA. (2014). TIA’s 2014-2017 ICT Market Review & Forecast. Arlington, Virginia: Telecommunications Industry Association.
2 Ibid.
3 OECD Broadband Portal. (2012) Business use of Broadband. Retrieved on April 10, 2015 from http://www.oecd.org/sti/broadband/oecdbroadbandportal.htm.

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