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Mobile & Wireless
The Fall and Fall of the PSTN
Report: Mobile and IP to march over PSTN territory in Western Europe
by Ken Wieland
We all know that traffic volumes and revenue generated by the PSTN are in decline, but perhaps we don’t know the scale or the rate of this trend. Analysys, a consulting firm, has published a report – Fixed-Mobile Substitution and VoIP: Forecasts for the battle for mass-market voice – that’s designed to fill in those statistical blanks for markets in Western Europe.
According to the report, the twin forces of mobile and IP will continue to undermine the PSTN. During the 2004-2010 period, Analysys calculates that the number of households retaining a POTS (Plain Old Telephone Service) connection will fall from 85 per cent to 75 per cent and the share of voice minutes originating on traditional telephony lines will fall from 72 per cent to 55 per cent.
Also, during that time, POTS spend will fall from 49 per cent to 39 per cent of voice spend. Moreover, overall voice spend will decline as a percentage of disposable income due to falling prices (although the upside of that is that there should be more money available – suggests Analysys – for users to spend on other services).
Doing most of the damage to the PSTN over this period will, of course, be mobile. Analysys expects the mobile share of the voice market to continue to rise, accounting for 35 per cent and 57 per cent of minutes and spend respectively in 2010 (the same figures for 2004 were 28 per cent and 51 per cent respectively).
The VoIP market, though, is still at a nascent stage but will develop quickly through to 2010. In 2004, VoIP in Western Europe accounted for just 0.3 per cent of voice minutes and 0.1 per cent of voice spend in 2004. In 2010, Analysys expects that VoIP could account for 9.6 per cent of voice minutes (but only 3.6 per cent of spend because of lower pricing compared with POTS).
Of course, fixed-line incumbents with mobile arms (with high market shares) need not necessarily fret too much about fixed-mobile substation (FMS), provided that those mobile arms are capturing at least the equivalent of their market share of fixed traffic migration. It is operators like BT, with no established mobile operation, that have the most to worry about and which has prompted the launch of its fixed/mobile service (BT Fusion) this month. Is this a good defensive measure against FMS?
“I think the forces of FMS are far stronger than FMC [fixed-mobile convergence],” says Katrina Bond, co-author of Analysys’ report. “The BT Fusion service will also require behavioural change on the part of the customer [no longer a fixed, communal phone in the house] which may affect the rate of service take-up.”
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