What is IP telephony and how will the PSTN switch-off affect my business?

A great shakeup of UK telecommunications is underway and businesses need to act now to ensure they’re prepared for the new age of cloud-based calling.

What is IP telephony and how will the PSTN switch-off affect my business?

A great shakeup of UK telecommunications is underway and businesses need to act now to ensure they’re prepared for the new age of cloud-based calling.

Businesses across the UK face a looming deadline to overhaul their telephony services, known as the great ‘PSTN switch-off’. Following an announcement by Openreach in 2017, the UK has started to transition away from its legacy PSTN network in favour of a modern, internet-based IP system.

This change will affect every business in the UK to some extent, so it’s essential IT decision-makers and business leaders understand what is coming, and how to make the most of the switch-off.

What is PSTN?

To understand what is happening in 2027, businesses can no longer purchase traditional landline contracts nor PSTN-enabled devices-like legacy phones or fax machines.

The public switched telephone network (PSTN) is the existing infrastructure that supports the world’s public telecommunications. Originally designed for an age of copper cables and analogue voice communications, the network has long been the backbone of the UK’s phone network.

In the 1980s, PSTN went through a digital overhaul with the introduction of integrated services digital network (ISDN), which allowed the transmission of not only voice data but video, images and more.

PSTN works by setting up a dedicated connection between two call points, using an amalgamation of fibre optic cables, satellites, undersea cables, mobile networks, all connected by automated switching centres.

What is IP?

IP is the technology that will replace PSTN in its entirety. Often referred to as digital phone services or Voice over IP (VoIP), the technology allows for telephone services to be routed over the internet instead of traditional wires and phone lines.

Unlike PSTN, which connects two parties with a dedicated connection using wires, IP functions by converting the spoken voice into a series of digital packets that are then sent over a single internet connection. As such, so long as a business has access to the internet, telecommunications can be supported.

Why is the change happening?

Openreach has been tasked by the government with modernising the UK’s telecommunications infrastructure, and ultimately plans to switch off the older PSTN and ISDN by 2027. This is a hard deadline, meaning any businesses that are still using PSTN to support their telephone systems will no longer have access to those services.

The switch to internet-based services has been spurred by growing demand for cheaper, more reliable, more accessible, and more flexible phone services. PSTN is widely regarded as being an antiquated technology and a hindrance to those businesses looking for more sophisticated phone systems.

IP services have existed for some time, but it’s only relatively recently that access to high-speed internet connections has become ubiquitous, providing the sort of bandwidth required to create stable connections that match, or often exceed, that provided by PSTN.

This is paired with the fact that cloud-based phone services have become far more sophisticated in their capabilities, and calling features like forwarding, hold functions, caller ID, and scaling services with additional phone lines, are all either free when using IP, or significantly cheaper than PSTN.

Simply put, Openreach is phasing out PSTN in favour of infrastructure that’s fit for the internet age.

What benefits will it bring for businesses?

The move over to IP infrastructure will bring a wealth of benefits to UK businesses, regardless of their size or industry.

How a business will directly benefit will depend on its circumstances. Some businesses will be using the switch over as an opportunity to revamp their phone systems, whether that’s embracing more advanced technology or simply consolidating their existing capabilities.

Cost

By far the most immediate benefit will be in expenditure. PSTN is generally more expensive to operate on than IP, largely because all calls are routed over the internet. This means many otherwise unavoidable costs are removed, such as installation fees and the need for dedicated desk phones.

It also means that distance becomes less of an issue, with low cost calling available regardless of where you’re connecting. Although businesses will still incur leasing costs, these are far lower than those found on PSTN.

Beyond infrastructure, the VoIP technology itself can be tailored to meet the needs of individual businesses, resulting in further cost savings. For example, we offer businesses a range of packages tailored to how much bandwidth they are likely to need, ranging from 50 Mbps, to 500 Mbps for larger businesses. In this sense, you are only ever paying for the services that your business needs.

Quality

Although calls made over PSTN can often be high quality, IP technology today can deliver crystal clear audio without dropouts, delays, or echoes. Routing calls over IP is also a way of protecting phone systems from outside disruption, such as when road maintenance accidentally cuts through a phone line.

Greater agility

The switch over will also mean that business numbers are no longer tied to physical premises, which is especially useful at a time when hybrid working is becoming more popular, and businesses are reassessing how much office space they need. In this context, IP allows a business to easily transfer calls between sites, spin up new lines on-demand, or scale back as necessary.

Unified communication

One of the biggest advantages for businesses is the opportunity to integrate powerful software suites inside the phone system, known as unified communications. This type of setup allows for unparalleled efficiency and collaboration across a business, bringing together multiple communication channels into one environment, whether that’s text, video conferencing, voicemail, and content sharing.

VoIP providers will often package these capabilities as part of their offering. For example, BT has partnered with Cisco Webex to offer integrated video conferencing and collaboration tools as part of its cloud-based service.

This is particularly important given the nature of work today, with many teams being dispersed across different cities, regions, and countries.

What challenges might businesses face?

By now you might be wondering, “this all sounds wonderful… what’s the catch?”

Unfortunately, given the nature of overhauling a base infrastructure of a telecommunications network that’s existed for many decades, there are some complications that come with the switch-off.

Legacy devices

It’s important to note that the PSTN switch-off will remove this technology from the UK infrastructure entirely, and so any systems that rely on PSTN to operate will no longer function.

This includes technology like CCTV and alarm systems, point of sale systems, and fax machines. Without preparation, these connected devices will simply stop working when the switch-off happens.

Cyber-security

Security can also be a challenge for some businesses, particularly those heavily reliant on PSTN and finding themselves new to advanced phone systems.

Fraud is an unfortunate fact of business life, and criminals may be able to exploit digital phone systems using a method known as number spoofing. This allows criminals to manipulate caller ID displays to obfuscate numbers, in order to trick the call handler in some fashion. It’s important then that you also have the necessary protections against the likes of fraud and data theft in place.

How can you prepare for the switch-off in 2027?

The PSTN switch-off is technically already underway, and so it’s important for businesses to start making their preparations to move over to a cloud-based phone system as soon as possible.

However, the switch-off will not happen in one go – some parts of the UK will have to act sooner than others. For example, the first phase of the plan involves a “Stop Sell” date, after which point it is no longer possible to order new PSTN services or make changes to existing ones. Most UK exchanges are already in this phase, and it will have taken full effect nationwide by September 2023.

The switch-off process began in April 2023, so businesses are encouraged to act quickly to modernise their phone systems. Depending on the size of the organisation, and how reliant it still is on PSTN, the project may involve significant upheaval and many moving parts, and so being able to withstand delay is essential. 

To best prepare, businesses need to consider their setup. Businesses with existing contracts with PSTN providers will need to map out when they are able to make the move based on contract renewal dates. This will also involve taking an audit of all the existing services that rely on PSTN, including CCTV, security and smoke alarms, and door control systems.

Let’s not forget the broadband connection itself. Businesses will need a stable connection to support their digital phone system, with call quality being reliant on high speeds and low latency.