POTS: Not Dead Yet

This article originally appeared in the June 2023 issue of Security Business magazine. When sharing, don’t forget to mention Security Business magazine on LinkedIn and @SecBusinessMag on Twitter.

It is the late 1990s, and you rush home after work, because you have been waiting for a very important personal phone call, and today is the day you get it. You sit there, waiting patiently, wondering why the phone is not ringing. You check the handset and listen for a dial-tone just to make sure that the phone line is working fine. What you hear instead of the dial-tone is a set of modem tones and beeps. Your son is connected to the internet and has been using your phone line to download music files – almost one hour for 3 songs, but well worth it in his eyes. You tell him to get off the internet to free up the phone line, and he does, and you decide to make that phone call instead. In the middle of the call, you hear a handset pick up, and numbers being dialed. It’s your daughter trying to use the line. This was the world we lived in, back in the 1990s – a world in which phone lines were our main gateway for communication.

Fast-forward to 2023. Statistically speaking, chances are you don’t even have a phone line in your house, almost everyone in your household has their own mobile device, and dial-up internet is not even a concept that you care to remember, as high-speed internet is readily available at any time. The world has evolved. Technology has evolved, yet for some reason, the use of landlines is still something we discuss today.

POTS is Dying, but Not Gone

Based on the Centers for Disease Control (CDC)’s 2022 biannual National Health Interview Survey of 15,000 U.S. households, 70.7% of American households were considered “cellular phone only.” Considering that those who answer these types of surveys may not make a clear distinction between actual POTS or a VoIP system that provides a similar user experience, the percentage is likely a lot higher.

It is easy to understand how the residential space has shifted away from traditional POTS connections in favor of newer technology. The proliferation of cellular adoption and the increased dependence on internet-based systems has drastically decreased the demand for traditional landlines in the residential space. 

While one would expect the commercial landscape to fare similarly, statistics are not as easy to come by for that segment.  The reliance on POTS connectivity – particularly in the life safety (commercial fire) space – is still very much prevalent, but conditions are changing. Although not as organically as with the residential space, the commercial world is turning away from POTS, driven by the increasing unreliability of the POTS connections it so desperately hangs on to, and the availability of better, more affordable options.

That said, these conditions have been around for quite some time. What is different now? What will be the major catalyst that will finally push POTS out of the life safety monitoring world?

As cynical as the answer may sound, the reason why the need to replace phone lines in the intrusion and life safety monitoring industry is ramping up comes down to money. Landlines have been getting progressively worse for quite some time, and although it has been an inconvenience resulting in false and delayed alarms, it has not resulted in the call to arms against the use of POTS that one would expect.

Regulations Pave the Way for Dramatic Price Increases for POTS

This is where the FCC and other regulatory changes have aided and are pushing the industry forward. Regulations, such as FCC-1972A1 that limit “burdensome phone industry regulations” are effectively attempting to usher in an “end-of-life” scenario for POTS.

Because ILECs (Incumbent Local Exchange Carriers) are no longer required to maintain POTS, they will have two choices: allow it to deteriorate until it no longer functions as intended or pass on the high cost of its maintenance to customers, usually without any warning.

In fact, early last year, Verizon started to transition many of its customers away from POTS, while AT&T announced it would decommission 50% of its legacy copper network by 2025, offering customers its fiber-based services to replace legacy POTS.

Those service providers who choose to maintain those landlines now have the freedom to essentially charge their customers a more appropriate fee more commensurate to their internal expenses. Regulations in place to protect the consumer for a transitional period have reached their expiration; thus, we can expect POTS costs to increase significantly for what is considered a “traditional landline.”

According to the U.S. Bureau of Labor Statistics, ILECs have greatly increased the cost of POTS service because of the maintenance but also, to force customer migration away from the outdated copper-line infrastructure. From February 2012 to February 2022, average monthly rates have increased 37% and could be up 75% by 2026, as these current trends are expected to continue.

If POTS prices continue to drastically increase, business owners will take notice, and will eventually look for alternatives. As the American market reacts to price hikes, the question we need to answer is: What can the security industry do? What should be our approach?

The Opportunity for Security Integrators

The call to action for the industry is the same as it has been for many years. As an industry we need to take the reins and become the service providers for the communication path. For years, integrators have been reaching out to customers in an attempt to convince them that the technology we offer (cellular, internet, etc.) is superior to the POTS connection they currently have.

The argument that communication pathways like cellular were better for the customer was always a tough one, unless there was something pushing the customer to look outside of POTS. The concept of “if isn’t broken, don’t fix it” was always an argument we had to deal with as an industry.

Thanks to all their drawbacks, the time has come for integrators to definitively tell customers that POTS is broken and will get worse unless it is replaced.

What makes this a critical point for security and fire integrators is the simple fact that the use of POTS lines will financially impact customers as prices go up. As customers get hit with higher and higher bills, they will start looking for POTS alternatives – an opportunity that integrators should not ignore.

Here is the opportunity to shift the recurring revenue direction away from other service providers and toward the integrator. If you are not there in front of customers, ready to educate and to present them with better options, they will seek out alternatives on their own.

Non-traditional manufacturers and service providers will also inevitably try to enter the space. A simple Google search for landline alternatives yields a plethora of results that primarily focus on the use of VoIP technology, which as we know is not best suited for the type of alarm transmissions that the security industry deals with. Reach out and educate current and potential customers before it is too late.

How many customers know what UL 864 is? Not many do; or if they do, they may not know the level of testing that goes into obtaining that certification. Thus, it is up to integrators to not only talk about the alternatives to POTS but to also discuss what proper alternatives look like.

It may be a tough conversation for security dealers and fire integrators to initiate, but as the landscape continues its current trend for POTS, it is a conversation that customers will initiate themselves. As POTS prices go up, the conversation will undoubtedly become more and more frequent, and integrators must ensure they are able to provide the right answers – not just to reap the rewards of more RMR, but also to protect customers from potentially bad decisions.

With everything we know about POTS, and everything we have learned about the different factors that are contributing to the elimination of POTS as a viable technology, the question is: Are you comfortable with technologies best suited to replace POTS, such as cellular and internet? As an integrator, do you have a portfolio of products and services to present a solution to your customers? Those are two questions that savvy integrators already have an answer for…do you?