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Verizon to go all VOIP in 7 Years

By Andrew Smith / Bloomberg News Service
January 12, 2009

Update: Verizon will not discontinue it's PSTN services but rather provide VOIP as an option to customers.

First, neither John nor anyone else here thinks that the traditional, circuit-switched phone network will be a thing of the past in seven years. What's often called the public switched telephone network (PSTN) is the world's most reliable, high quality, landline voice communications system. The Verizon traditional phone system will serve customers for a long time to come.

John's point was, and there's not a lot of new news here, that we see that voice can and is becoming an application called VoIP on broadband networks.

VoIP is a logical platform for any company wanting to break into the voice services business, and hundreds of companies have seized on this technology to do so, including every major cable TV company. However, the quality of VoIP voice calls and the reliability of VoIP networks are in no way superior to the quality and reliability provided by the Verizon PSTN network. In short, there is no logical reason for a company like Verizon, with a terrific voice network already in place, to dismantle that network and replace it with VoIP.

Verizon announced at CES that the end of switched networks is nigh:

The company will start offering Internet calling to its FiOS Web and TV customers in the coming months, starting in Maryland, Chief Marketing Officer John Stratton said Thursday at the Consumer Electronics Show in Las Vegas.

By offering so-called voice over Internet Protocol, or VoIP, calls, Verizon is mimicking providers such as Vonage Holdings Corp. and cable companies, which have won customers with digital plans.

An Internet-based service can be maintained at a fraction of the cost of a phone network and helps Verizon offer a greater range of services, Stratton said.