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The Time is Right for PSTN Migration

Service providers recognize that the public switched telephone network (PSTN) is in need of transformation. But many struggle with questions about how to approach transformation and what solutions to deploy. Most current investments focus on upgrading to ultra-fast broadband networks. These upgrades will facilitate PSTN transformation. With the right mix of mobile, fixed broadband and narrowband technologies, service providers can migrate the PSTN to an IP-based network that delivers cost savings and unlocks new revenue opportunities.

Why the PSTN needs transformation

For decades, the PSTN has been a reliable source of voice service revenue. So why would service providers think about replacing this tried-and-true TDM-based technology with IP-based voice services? There are three good reasons why PSTN transformation is an option well worth considering. First, time is winding down on TDM-based voice technology. Most vendors have announced end of life of their PSTN portfolios and maintenance contracts by 2018, if not before. Service providers will find it increasingly difficult to upgrade and maintain their legacy PSTN equipment. They must find other viable solutions to fill the void. Second, PSTN revenues are decreasing. Today, there are no TDM-based voice services that create new revenue. More and more providers are eliminating analog voice services in favor of packet-based digital voice services so they can offer new services, create new revenue and prevent churn. Third, the cost to operate the PSTN continues to rise. As more users move to mobile and digital voice services, service providers have fewer users connected to their TDM networks. But the PSTN equipment and central offices (COs) remain, and must be maintained. Beyond maintenance and real estate, the combination of low port utilization, increased hardware failure due to aging equipment, soaring energy costs and tougher environmental regulations adds up to much higher per-user costs.

Why investing in PSTN makes sense

Service providers typically operate several parallel networks — for example, a TDM network for voice services and an IP network for data services. An ideal scenario for many service providers would be to unify all operations and services on a single IP-based network. A unified network built on IP offers several key benefits. For example, it can be evolved, commissioned and operated much more cost effectively than TDM or parallel networks can. It increases revenue potential by providing support for compelling new services. What’s more, it is future proof and can easily evolve in step with changing technologies and user interests. Every service provider would like to enjoy these benefits. But the reality is that it’s not easy to migrate all PSTN capabilities from TDM to IP networks. Service providers will face some complex operational challenges along the migration path. Before deciding to pursue PSTN transformation, a service provider must think about how the role and use of PSTN will evolve in the coming years. Here are some key factors to consider in building a PSTN transformation business case:

  • Customer churn: Users will continue to embrace mobile and voice over broadband services. The yearly decrease in number of PSTN subscribers differs across regions with North America at 10%, EMEA 6%, APAC 3% and CALA at less than 1%. By 2023, 60% of US households will use wireless voice exclusively, and 20% of US households will use VoIP services.[1]
  • Increasingly universal broadband: Broadband build-out continues around the world. Service providers need to find ways to use these broadband deployments to upgrade voice services.
  • Demand for transparent migration: Many customers want to preserve the status quo for voice services. A forced migration may create opportunities for competitors to pull customers away. Operators must guard against churn by ensuring that these customers aren’t disturbed by migration processes.

Demand for PSTN voice services is decreasing, so it’s fair to ask if it makes sense to invest in the underlying network. The fact is that PSTN services aren’t going away any time soon. While a large segment of users will eventually migrate to digital or wireless voice, many will continue to rely on plain old telephone service (POTS). Even in highly developed markets, there will always be end users who don’t want to be upgraded or who can’t be upgraded. For example, recent estimates show that 20% of US households will still use POTS-based voice services in 2023.[2] An investment in PSTN replacement makes sense because it will lower operating costs for revenue-generating voice services and make it easy to introduce a new generation of IP-based services, including web portals and smartphone clients.

Building a migration strategy around the end user

Service providers can use commercial and technical migrations to move PSTN customers to the IP network. In a commercial migration, a service provider migrates a voice customer to the new network as part of a new contract, such as a bundled offer that includes Internet access, voice over broadband or IPTV. This strategy comes with some risk, because not all customers will be willing to sign up for new commercial offers. When presented with a new contract offer, some may take the opportunity to explore competing offers or cut the cord completely. A technical migration is totally transparent to the customer. The customer continues with the same services and contract. With a technical migration, the risk of churn is minimized, as there are no changes in service and no additional customer interactions. In evolving the PSTN, service providers should first consider pursuing a commercial migration through a bundled service offer. As a second option, they can consider a technical migration for users who don’t want to move, or who can’t be moved, to another technology.

Choosing the right technology mix

There is no single “best” technology for PSTN migration. Service providers need a mix of technologies that can address customer demands and preferences while delivering cost-efficient migration. The key is to consider what the customer wants. For example, customers who have used the same voice technology for many years may be worried about changing what they have. Other customers may be excited about the opportunity to move to voice services that can take advantage of the newest technologies. A blend of different migration technologies will help keep users satisfied. What technologies should be part of the PSTN migration mix? There are a few clear candidates:

  • Voice over broadband will enable service providers to leverage worldwide growth in broadband deployments to offer PSTN services on copper or fiber access lines.
  • Voice over narrowband will be a suitable choice where broadband is not available or in cases where it’s vital to avoid disturbing or disrupting customers.
  • Mobile voice will be a complementary fit, and in some cases the primary choice, particularly for younger consumers who have grown up without having a fixed line.

Voice over broadband vs. voice over narrowband

The key difference between voice over broadband and voice over narrowband is the location of the voice gateway functionality – in other words, the session initiation protocol (SIP) endpoint and analog-to-digital conversion point. With voice over broadband, the voice gateway functionality is at the end-user site, for example, at the IAD, the DSL modem or the optical network terminal (ONT). Conversion is performed very early in the network. With voice over narrowband, the voice gateway is located in the access node. Conversion happens in the network (CO or cabinet). Both narrowband and broadband can provide a near-perfect emulation of PSTN services, supporting all legacy services. Migration is transparent to end users, who can continue to use their existing analog phones. Voice over broadband also has the ability to simulate most popular PSTN services. The simulated services may behave differently in specific instances, but they provide service providers with opportunities to introduce customers with IP phones to new services like push-to-call and IP Centrex.

The voice over narrowband advantage

A mix of migration technologies will be required in all cases. However, voice over narrowband does offer some particularly compelling advantages to service providers. These advantages include:

  • Zero end-user impact: Voice over narrowband offers totally transparent migration. Service providers can maintain service continuity without truck rolls, phone calls or additional appointments with the end user.
  • No additional CAPEX on the end-user side: With voice over narrowband, the equipment is in the network. There’s no need to install new equipment at end-user premises.
  • A gateway to broadband: In areas where broadband deployments are not advanced, migration to voice over narrowband puts service providers in better position for future broadband rollouts.
  • Low OPEX: Voice over narrowband offers easy maintenance. All POTS interfaces are in the network, and there are no IP phones that will require end-user support. In addition, the technology will take up a small footprint and reduce power consumption in the CO.

The benefits of PSTN transformation

Transformation to IP technologies offers some vital advantages over the TDM-based PSTN. For example, migration to digital voice can help service providers cut real estate costs. With the compact equipment used for IP networks, providers can fully commit to consolidating or phasing out inefficient or outdated central offices. They can also cut energy costs substantially. In fact, PSTN migration offers a dual benefit relative to energy savings. First, it avoids consumption waste by eliminating the need to operate parallel networks. Second, voice over broadband and voice over narrowband consume 6–8 times less power than PSTN, with the latter providing particularly strong power-saving opportunities. Figure 2 shows the energy cost savings that service providers can enjoy by migrating PSTN users to a mix of voice over broadband and voice over narrowband technologies. These savings grow when all PSTN users are migrated to voice over narrowband.

PSTN transformation can also provide a path to increased revenue. With voice over broadband, service providers can increment ARPU with new services and capabilities like second lines, soft phones, service management portals and voice mail–e-mail combinations. In areas where broadband is not widely deployed, service providers can offer voice over narrowband with a multiservice access node, which provides a converged platform for voice and xDSL. In both cases, service providers will enjoy the immediate benefit of operational efficiency and be better positioned to quickly introduce new broadband services as required. These new services will help them gain a competitive advantage in winning end-user market share.

Don’t wait to migrate

Service providers can count on revenue from traditional voice services for many years to come. But service providers must rethink the PSTN if they intend to maximize returns from these services and ensure that their businesses remain profitable. With the right mix of broadband and narrowband technologies, service providers can transform the PSTN into a low-OPEX network that opens up new possibilities and new revenue streams. It’s the right time to act. By replacing the PSTN at the same time that they deploy universal broadband, service providers can ensure that PSTN transformation is successful and cost effective. To contact the author or request additional information, please send an email to


  1. [1]Infonetics Research 2013
  2. [2]SNL Kagan, 2013
Ana Pesovic

About Ana Pesovic

Ana heads the Fixed Networks Fiber marketing activities in Nokia. She built up extensive international telecom experience, with positions in sales, pre-sales and R&D in Germany, Spain, Portugal, Belgium and India. Ana has a Masters Degree in Informatics and Computer Science from the University of Belgrade. As member of the Board of Directors of the FTTH Council Europe, she’s a strong advocate of Fiber.

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