Private Telephone Systems Reduce POTS Line Costs

Computer data networks and  circuit-switched voice  networks are completely separate, with individual staffing,  billing, maintenance, and accounting sys- tems. Although the  maintenance costs of computer networks are affordable for most companies, the  recurring charges for traditional forms of telephony are huge  for small,  medium, and  large multilocation companies. VoIP is designed to converge (integrate) a company’s voice  needs onto the  com- pany’s  existing computer network. If a company does this,  they  can eliminate most (if not  all) recurring circuit-switched telephony charges.

In the  past, the  POTS world had  only two types of services: local and  long dis- tance. Local service covered the  entire metropolitan area,  with no distinc- tions for the  various levels  of toll service that we have  today. In the early
days  of the  telephone, long-distance cost customers dearly. A call from New York to the  west  coast might  have  cost $3 to $4 per  minute. Today, that same call might  cost a consumer $.02 to $.05 per  minute and  a corporate caller $.01 to $.03 per  minute. The corporate customer is most likely on some sort of dedicated private network consisting of a phone system connected to the  PSTN.

It might  appear that the  cost of telephony today is dirt cheap in historical terms. This would  be a mistaken conclusion. In addition to the carriers get- ting more  organized and  the  government increasing its regulation of the  telecommunications industry, many  changes have evolved. These changes have  increased your  bottom-line telephone bill and  increased the  number of line items on that bill.

Now, instead of just  two types of phone service offered  on the  PSTN (local and  long distance), we have  five: local,  intralata, intrastate, interstate, and international. Each of these is discussed in detail in Chapter 3. These five ser- vices  are based on the  origin  and  destination of a call, using  the LATA and
NPA-NXX to determine those locations. In addition, the  same system is used by the  government to place various surcharges and  fees on each telephone access line.

No one would  argue  that the  quality of carrier-switched telephony is excel- lent.  However, the  system that has  evolved for charging telephony customers leaves much unsaid and  a lot to be desired. Except for local calling,  VoIP can reduce or eliminate the  charges of the  other four categories.



To lessen the  burden of newer and  diverse telephone costs, many companies have acquired their  own POTS-based telephone systems. Company-sponsored telephone systems can reduce the  monthly bill that consumers and  compa- nies  pay for telephony services. Four different telephony system models have  evolved in the  past three decades.

The first model, POTS, has  already been described; it is the  use of telephony access lines  and  carrier services over  the  PSTN through a carrier. The other models are the  Centrex, KTS, and  PBX models. Each of these are discussed in this  sections.