While there is a common perception that global fixed line subscribership is in free fall, and that consumers are abandoning fixed lines en masse in place of mobiles, the reality is not so clear-cut. New data from TeleGeography’s GlobalComms Database reveal that, while traditional circuit-switched (PSTN) telephone lines are declining steadily, much of the decline in switched subscribers can be attributed to the growth of fixed voice-over-IP (VoIP) services.
Total (PSTN and VoIP) global fixed line voice subscribers peaked at 1.29 billion in 2008, and have declined at a compounded annual rate of 1.3% since. The fixed voice market is in a period of gradual long-term decline, but the aggregate numbers mask a large shift in market composition. While switched telephone lines have declined at a compounded rate of 4% per year, VoIP subscribers have grown 18% annually, helping to offset much of the decline in switched phone lines.
VoIP connections now account for 20% of fixed lines worldwide, up from just 8% in 2008. This uptake is largely attributable to the rapid adoption of multi-play plans, where fixed voice service is bundled with broadband Internet, TV, and sometimes mobile telephony services. For example, in June 2014 US telco AT&T reported that 97% of its TV customers subscribed to at least one other service, while two-thirds of these users subscribed to three or four.
It will be decades before the PSTN disappears from all corners of the world, but the trend towards VoIP is inexorable. In 2013, 25% of fixed lines in eastern Europe were IP-based, while 35% of fixed voice lines in western Europe and 33% in North America were IP. Some national incumbent providers are now transitioning to all-IP networks. Earlier this year, Deutsche Telekom enabled Macedonia to become the first country to switch fully from the PSTN to an all-IP network, and the company aims to turn off its legacy TDM switches and completely convert its network in Slovakia to IP by the end of 2014.
TeleGeography projects that total global fixed lines will fall to 10% below their 2008 peak level by 2018, at which point switched lines will have declined by 33% while VoIP lines will have grown by over 250% to account for nearly one-third of phone lines worldwide. ‘Fixed line voice is a far cry from dead,’ said TeleGeography analyst Mark Gibson, ‘but it is no longer synonymous with the PSTN.’
GlobalComms is TeleGeography’s constantly updated online database of wireline, wireless and broadband competition. No other telecommunications market research service rivals its geographic scope and depth of coverage.
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