Why the PSTN switch-off is a bigger deal than you think | IoT Insider Podcast Episode 23

Dan Cunliffe
Hi everybody, and thanks so much for tuning into the IoT Insider. My name is Dan Cunliffe and I’m Managing Director of Pangea, and today I’m thoroughly happy to be joined by Julien Parven, who is the Director of Partner Business at Daisy Communications. Hi, Julien, how are you?

Julien Parven
Hi, Dan. I’m good thanks. How are you?

Dan Cunliffe
Very well, thank you very well, just recovering a little bit from last week’s sessions at Comms Vision. One or two many whiskeys. But we’ll be fine. We’ll get through, it’s just about surviving.

Julien Parven
I think Comms Vision tends to bring out the worst in people.

Dan Cunliffe
Yeah. And also the biggest spend at that bar I believe has ever seen. But yeah, thank you so much for joining us. And I just want to give Julien an opportunity just to give a little bit of an intro really, into sort of a bit of background, if you wouldn’t mind?

Julien Parven
Yeah, of course. So I’m the Director of Partner Business within Daisy Communications. So I look after our indirect channel. So effectively, what that means is that we pass through our Daisy build services via a channel of partners, ultimately serving the the SMB customer. And that ranges from, mobile at one end to, I guess, sort of, you know, high end system sales at the other end. And every facet of the of the communications workflow in between, and IoT is something that we’ve come into relatively recently, I would say, sort of within the last four to six months in earnest. But certainly from the response that we’ve had from our partners, it feels like we’ve entered this opportunity area, certainly at the right time. And I feel that with what’s happening in the marketplace, and the number of conspiring factors around, that it really is a perfect opportunity for ourselves as Daisy for our partners, and ultimately, for our partners customers to look at IoT as being part of that digital transformation and how they reinvent themselves and how they see working differently.

Dan Cunliffe
Yeah, very much so. I think we recently had the pleasure. And thanks again, for the invite, to present at Julien’s event, which was the Daisy Partner Business Live event, and essentially had the opportunity just to speak with those partners about changes really, and kind of the things that are coming down the road in our in our market, and we are particularly using a term; intelligent mobile data within the IoT space if you want, because I think that helps to drive the sort of not only better sort of understanding or quicker understanding but also helps people to align it with where they understand mobile data being today.

Julien Parven
And I think that’s a great term Dan, because possibly the, you know, the misconception, and maybe, you know, a misconception I shared with many people before, you know, really engaging with you guys was that, that IoT was was about just simply the transfer of very small packets of data. Whereas actually bringing it to life within that term of intelligent data, really, you know, starts to do it justice in terms of the applications that can sit on the back of it, the use cases and the sheer breadth of how that mobile data service can facilitate businesses to become more efficient, to become super effective, to become, you know, ultimately more profitable as well, at the end of it.

Dan Cunliffe
Yeah, no, you’re right. And you know, even we had to kind of refresh and think about how we can help people to learn quicker about it. But today, we’re taking another step on that, which is particularly talking about probably one of the biggest, I wouldn’t say the biggest, but a very big change in UK telecoms infrastructure, which is the move away from analogue to an IP network and the turnoff of PSTN. Yeah, which is aimed for the end of 2025.

Julien Parven
Yeah. And, you know, just to go back to what you said there, I mean, whether it’s the biggest change to ever have hit the the industry, I certainly with confidence would say that it’s the biggest change within the last 30 years. Yeah, for sure. Yeah. And it’s a you know, it’s a change that is really, really not to be underestimated. You’re reading analyst reports, one came through this morning to me, and that was predicting that by coincidentally, by 2025, you know, that 85% of organisations, were going to be sitting on an IP infrastructure, they were going to be IP based. From where we are now, which I think is at about 15%. So in that period of time, you know, there’s a huge seismic shift that’s going to take place. And if you look at where we are now, you know, realistically, whenever I look at these things, I always project six months ahead. So you know, in my mind, we’re kind of end of financial year 2021/22, starting financial year 2022/23 And when you put it in those terms 2025 is not a long way away.

Dan Cunliffe
No, agreed. And the bit that I think maybe just to give people a little bit of context, maybe we just talk a little bit about, you know, what’s actually sort of happening and like what it is, you know, for those of you don’t know what PSTN means it’s the Public Switch Telephone Network. It’s about 100 years old, you know, as Julien said, you know, maybe the biggest change in the last 30 years, I would probably agree with you, but the thing is, it’s very similar to when telephone lines were first delivered. Yeah, it took a very long time to deliver copper lines all across the country and get ubiquitous or as far as possible ubiquitous coverage with copper lines, to be able to have a telephone call in all places, but today, it still supports I mean, many, many lines, I think we’ve got in total, about 2.4 million lines are supported by PSTN. You know, essentially, that’s looking after some critical services as well. It’s not just your standard broadband for home, isn’t it?

Julien Parven
It is, indeed. And you’re right, in what you were saying that, you know, it is very worthwhile spending that time just to, I guess, demystify it, because, from my opinion, from my experience, I think there’s some real trains of thought out there amongst the population that either from disbelief, denial, or actually just pure, I’m not gonna use the word ignorance, because it’s got a bit of a negative connotation to it, but just just a complete lack of, of knowledge or understanding about what is on the horizon. And when I’m saying horizon, I’m talking about the very near horizon.

Dan Cunliffe
Yeah, I mean, just to add some context to that for you guys that are listening that, you know, although we talk about the switch off in 2025, it’s actually started, the sunset has begun. So as of today, we have hundreds of exchanges that are on what they call the stop sell already. So you couldn’t buy the service in that exchange anymore if you needed it. And I think it’s quite, the penny sort of drops for a lot of clients don’t they, when they realise, oh, I actually can’t buy that service anymore in that exchange.

Julien Parven
And it goes beyond just being able to buy that service. You know, once an exchange enters stop sell, then customers sitting within that exchange area will not be able to make changes, so moves, adds, changes to their infrastructure will be blocked. There’s no facility for them to be able to do anything other than keep their existing infrastructure until such a point that that exchange is switched off completely. The fundamental impact of this is more than significant. And I think it’s probably also worth touching on, you know, and demystifying one of the things that’s out there, which is that this is only going to affect businesses, because the reality is it isn’t, it’s affecting everybody in the UK. So residential homes will go through exactly the same stop sell and will be required to migrate off that PSTN technology onto an IP based telephony solution within the same time scales as businesses will.

Dan Cunliffe
No, 100%. I think that’s why we want to talk about it because both our businesses together, are quite passionate about what’s actually coming up and how we’re going to deal with this. And I think, maybe we just talk a little bit about sort of, you know, we’ve called it ‘what’s the fuss all about?’. But, you know, I think that things like WLR lines just won’t be an option anymore. And I think that could be quite a shock for some people’s revenue streams, particularly if you are still based on that. And I know that in the telecoms industry, it’s been raised a long time ago, do you know, effectively diversify the way that you sell products, bring in other things, hosted Cloud products, and get more into intelligent mobile data, get more into other things so that you’re not so dependent on your revenue from WLR. You know, I just worry about those guys who are still in that vein.

Julien Parven
Certainly, from an opportunity side, on a positive note, that switch to IP telephony just opens up so many additional doors, and avenues. And it’s the conduit to have those different conversations with customers, if you’re sitting within, you know, within a channel environment, to start to become more than just the provider of a line and call package to actually start to understand, you know, how you can integrate within the business itself and how you can do the thing that we’ve been talking about for many, many years, which is, you know, how do we add additional value? How do we become, through the pandemic, telecoms continued to operate because it was deemed to be an essential service, and rightly so. But I think here, you know, we need to take a look at how we become the essential service to customers, to help them through that journey to help them navigate their way through that digital transformation.

Dan Cunliffe
I totally agree with you. I mean, let’s maybe talk about what if someone’s sort of only just realising this or you know, unfortunately have listened to us and then go ‘Yeah, actually that’s something to get my head around’. There are other options. You know, it’s not like it’s completely dead in the water, there are other ways to go. And I think some of those are probably things like what they’re terming as SOGEA, which is the Single Order Generic Ethernet Access for those who need to know that. However, the thing with that particular scenario is that it is also an analogue solution. And it’s running on the same copper lines, which means that the distance from the exchange still makes an impact. But there’s also going to be ways in which you can use alternatives. Do you know, do you want? Talk a bit about those?

Julien Parven
Yes, absolutely. And it’s when you start to look at those that you suddenly see the legacy of that WLR network, and you see how unfit for purpose, it really is. You know, things that we take for granted on a day to day basis with till units, payment terminals, all of which are sitting on that analogue PSTN backbone, they all need to be moved into a new or a different technology, similar to CCTV, to lift monitoring, the breadth of that PSTN network that’s going to be switched off and the reach that it has, is astronomical now. And I think this switch off gives a real opportunity for people to look at technology that’s fit for purpose. So with things like payment terminals, you know, yes, it may be a static payment terminal in a single location. But actually, those payment terminals would be much better served by a 4G connection, simply because of the quality of connection, the robustness of it, and the additional speed that it brings you.

Dan Cunliffe
I agree, I think, you know, we’ll touch on the fact that the reason why we, on this particular session, are addressing the alternatives is because yeah, I think both businesses agree that having a different way to access over the air, essentially using 4G, using the Daisy Anywhere service, the ability to connect to multiple networks with a single SIM card, and also the advent of 5G, means that you are essentially future proofing that connection, if it fits into the best way to do it. Right. I mean, Julien mentioned some incredible options there, which is lift companies, the one I quite like a lot is cash machines, they all use analogue lines, and probably don’t use that much data, but could probably service themselves better with a 4G service. But some of the other options around that is, you know, pretty much anything, not pretty much, definitely everything you can do today, with a broadband connection, you can do with a cellular connection. And I think that’s what’s quite important for people to hopefully pick up is that where possible, both from an opportunity and a commercial perspective, why not? Then, you know, why not go for something that is, over the air, easier to deploy, and in my personal experience a little bit easier to support as well?

Julien Parven
Certainly, I think the support element is critical to it. And you know, bringing mobility to those static services that have been sitting on the analogue network, then just opens up much more opportunity and much greater flexibility for organisations. And we’ve seen, over the course of the past 18 months, you know, that absolute need for flexibility, you know, and I don’t want to dwell on COVID or anything, but I think, you know, in my opinion, I don’t think we’re out of the woods yet. And I think organisations now, you know, given the breathing space that we’re in, should very seriously be looking at one future proofing themselves against this PSTN switch off that has got an absolute hard line in the sand, but also challenging themselves about transforming their business and, securing their business should something happen in the near future.

Dan Cunliffe
No, well, let’s, um, if we can like, I just want to talk through a couple of stats, and maybe, you know, I’m happy to sort of share some of the case studies that we’re working on and sort of what type of people from a kind of a large perspective and sort of normal perspective are actually doing it right now. So for example, right? I mean, yeah, back to the pandemic conversation, but actually, in 2020, mobile data usage increased by 28%, which is, people need to understand that that is, you know, almost 30% increase in a massive market already. You know, it’s not like it’s a one to 10 type scenario. It is a huge market, but also for partners, and customers of yours wanting to get into this market, and a lot of them are business owners. Actually, the value attributed to an intelligent mobile connection is quite a lot higher than a traditional fixed connection in terms of your exit value. So there’s a good reason to do it from those two perspectives. The bit that I kind of, probably like the most is the fact that during 2020, and probably the last 18 months, the UK lost almost 5 billion pounds due to outages. The fact that people couldn’t connect and didn’t have a, I suppose a robust and a, what’s important is a different backup solution. A lot of guys think they have a backup solution, don’t they? They really do think they’ve got a backup solution in PSTN or in broadband. But the problem is that all goes back to the same exchange. And quite often, if you lose the primary service, you lose the secondary service as well. Yeah. And they don’t quite understand that. And, you know, one of the things that I know we are going to work on with you guys particularly is making sure that, you know, stay sort of away from, first of all PSTN as a backup. I don’t think that’s smart anymore. Because of the turnoff, and various things, but actually looking at these alternatives, because they just are better aren’t they?

Julien Parven
Yeah, absolutely and it always makes me laugh when you talk to customers, or you see partners deploying solutions, and actually, the backup service sits on exactly the same technology backbone as the primary service does. Then you’re thinking ‘well, surely that should give you a clue’ that really that backup, that disaster recovery, that business continuity, call it what you will, is fundamentally flawed at the very outset. So it makes absolute perfect logic and common sense that your backup should be on a different technology stream to your primary connection. And it stands to reason that that secondary technology stream should be mobile?

Dan Cunliffe
Well, I think, you know, this is obviously from my perspective, but I believe wholeheartedly that the intelligence that we’re bringing to mobile data and the ability to use it as if it was broadband, but it moves, right, like, that’s the way I think is a really quick way to think about this stuff, is going to become probably one of the biggest revenue streams in the next four or five years, you’ve got the advent of 5G, you’ve got the proliferation of devices, and you have some compelling events, like the turn off of the PSTN coming in your direction. So you know, the Daisy partners, 100%, this is something that definitely opens up doors for you guys.

Julien Parven
Yeah, it’s a perfect storm. I mean, the three events that you described, you know, combining those together, I think from a partner perspective, it makes it a no brainer, that they should be starting to look here. And it’s not just about sort of the revenue for the here and now, I mean, you mentioned an exit value there. But I think the ongoing revenue streams, through embarking on this journey, are significantly higher for the partner than the revenue streams that are available to them if they do nothing and just continue to sell what they’ve always sold, because it opens up so many different conversations opens up so many more conversations of differing types, where they can start to become much more under the skin of their customers business. And once you achieve that, and once you do get under that skin, then you become that person that we’ve all strained and tried to attain, which is the trusted advisor. And achieving that doesn’t become, it removes that seller and purchaser relationship, and very much forges a consultative relationship. And in those models, that consultative relationship can drive additional revenue opportunities, plain and simple.

Dan Cunliffe
100%. I couldn’t agree more. I mean, if you wouldn’t mind, I’m going to take the listeners through two case studies we have at the moment, particularly on this; one is already happening. And the other one is very much on the horizon in terms of the timeline for them. The first one is again, you know, through a partner, but basically looking at the, I can only term it is what they would call street furniture, or, you know, think of street traffic lights, think of the little grey boxes that you see sort of along high streets. This is in a major city, London, in this case, and every one of those devices delivering a service, were connected through PSTN and a broadband line. It’s been there for a long time. And this company has decided that actually they want to future proof that and they fit the profile to swap out 4,500 of these connected street furniture sites, if you want to call it that, and move them to the equivalent of the Daisy Anywhere product. And these would be on private static IP in this case, and they’ve already started the rollout. The rollout, we’ve done 1000 already out of the four and a half thousand. But it is happening today. And I find it very facinating because you can walk up and down London, you can actually say ‘Oh, that is going to change to the new way of working’. The total contract value of that is about £2.8 million to the partner. So you know, it’s not like we’re saying, just you know, there’s little money in this. Again, to your point about learning about IoT you know, intelligent mobile data, what’s the value? That is 4,500 endpoints in the deal. But the total contract value is 2.8 million. That’s a huge opportunity. Yeah. Which is useful, right. And you think that’s definitely worth understanding. And the second one is, quite interesting. In fact, it’s twice the number of endpoints, it’s close about 10,000. But this is something that I think is it gives you a very good understanding of what is low hanging fruit in the PSTN switch off and changes. So these are all cash machines. Now, traditionally, the cash machine is connected with a broadband line off the back of a PSTN and their data consumption is actually quite low. They’re not sending videos all over the place. This is, you know, texts backwards and forwards. So the data requirements quite low, but the resilience and the capability, you need to connect that thing has to be much better than PSTN. And so this is particularly going through a case study now with us which the rollout starts later into next year. And again, this is probably more, it’s a very similar value, because it’s double the endpoints, but it needs a little bit this data. So this is again, just as about £2.9 million in terms of total contract value, in terms of those deals coming through, but I think I think here, it’s all about, you know, the customer realises that, yeah, I should be doing this, I kind of have to do this. But my better alternative is to go for a wireless connection rather than a wired.

Julien Parven
Yeah, it’s, I mean, it’s really interesting that you’re saying that you’ve got partners involved in these opportunities? Because I think, again, you know, it may be that some partners would look at this and think, Well, you know, the opportunity size for me is relatively small, because, you know, the large opportunities, the examples that you quoted, there are really outside of their scope. And the truth is that they’re not, we’ve proven it in those two examples, there. You know £2.8 million, and £2.9 million contract value in exchange for actually the amount of effort and technical knowledge that was required to deploy the solution, there’s a real disconnect between the two, if you like, in terms of that, this is a logical thing for the customer to do. And as you said, you know, they have to do it, at some point, the partners managed to start that conversation by not just talking about the fear around the PSTN switch off, but starting to talk about, you know, the benefits of intelligent data. So, you know, they sold a solution as opposed to solving a problem. Yeah, and I think just coming back to that former point, or that previous point, the customers have to do it. And, you know, God forbid that all the customers decide that they’re going to wait until the last minute. Because there’s going to be a challenge in terms of moving that volume of customers in a short space of time, there already is a challenge. And we’re coming to the end of 2021. So you know, sitting on our hands until the dawn of 2025, is really just not an option for me, this work needs to start now. And with any transition, and with any seismic shift the way that this is, it’s the guys that are going to be in at the outset that are going to benefit from this.

Dan Cunliffe
Absolutely couldn’t have said it any better myself. I think we’re getting close to our time, in terms of where we are. But I think the the bottom line is, you know, do yourself a favour if you’re listening to this, you know, think about your base, think about your customers and who is affected and how they might be affected, particularly, you know, head over to either the Pangea or the Daisy website, daisycomms.co.uk to find out what we’re talking about. And maybe have a browse around to figure out how this can work for you. I really wouldn’t adopt a sort of, it’s not really come to me yet so I’m not going to worry about it situation, because I guarantee you that pretty much anyone who’s listening to this would have had a customer on a 24 month contract, and that customer might need something in the next 24 months. Or even if you get to the end of that term, this stuff has to be addressed pretty soon. And you’ll probably feel it when you try and order something at an exchange that doesn’t have it available anymore. Or a change needs to happen, as Julien said before, I think you’re gonna kind of struggle for that. If I may, thanks so much for listening. It’s really important that we can get some feedback if anyone has anything to ask for particularly to myself or Julien. Otherwise, you know, do head over to Daisy’s website and check out their Daisy Anywhere product. Superfast highly flexible Multi-network 4G service, can do things like public static IP and a lot of really, really interesting products and services it’s supporting already now. But most importantly, you know reach out to Julien and particularly about the switch off and the change in PSTN or to his team before it’s too late. I think is probably the the message here isn’t it?

Julien Parven
Absolutely, the time is now. We can’t afford to and we don’t want to be sitting on our hands. So you know, help educate the customers, those that have got their head in the sand that are in denial about this. Take them on that journey. And you know, collectively let the customer benefit from that move to the new technologies and from the understanding of what intelligent data can do for their business. Let you guys in the in the channel benefit from being able to have a different conversation with customers that I think we’ve all been crying out for. And collectively let’s do the right thing and just make sure that we’re you know, together we’re building a better Britain.

Dan Cunliffe
Exactly. Perfect. Julien Parven Director of Partner Business at Daisy Comms thanks so much for joining us and I really appreciate your time. To the listeners, yep, as usual, do check out our LinkedIn page. Website, pangea-group.net. For more information where the podcast will be up shortly. I’m Dan Cunliffe Managing Director of Pangea, thank you so much for listening.