What will the PSTN switch-off mean for your small business?

Blogs 30 May 2023

In under three years, the whole country will be using full-fibre infrastructure and internet technologies to make and receive calls, as well as for the delivery of other services. Find out how the switch-off of the analogue telephone system in 2025 will affect you.

PTSN network switch off

This article was first published in First Voice. Written by David Adams, freelance business journalist.

On 31 December 2025, the UK’s public switched telephone network (PSTN) will be switched off. Although it has evolved to incorporate fibre optics and digital technologies, the PSTN – based on the first automated telephone exchange, invented in 1891 – is not fit for purpose in a fully digitally-enabled economy.

It is also becoming operationally and financially unfeasible for the network operators, BT, Virgin Media and KCOM, to maintain both the PSTN and the newer infrastructures that now support most of the UK’s internet use. Instead, the country is transitioning to a system based on ‘full fibre’ ethernet connectivity.

By the end of 2025, any telephony and other services that run on the PSTN – including fibre to the cabinet and asymmetric digital subscriber line-based telephony and broadband services, plus integrated services digital network lines, fax machines and many point of sale systems – will need to be delivered via a full-fibre infrastructure, rather than the copper wires that carry at least the final stage of the PSTN internet services used today. Landline phones will need to be internet-based, probably using Voice over Internet Protocol (VoIP) technology.

The switch to full-fibre technologies should deliver better quality telephony, broadband and other digital business services. But what do you need to know and do before 2025? And why do so few people seem to know about this change?

Advance warning 

Research conducted by the Federation of Small Businesses in 2019 suggested that about 40% of small businesses use broadband delivered via the PSTN, including many based outside larger urban areas. FSB senior policy advisor Chris Russell suspects that the proportion is probably very similar today, in part because small businesses may have been even less likely than usual to have switched broadband providers during the past three years. “A significant chunk of businesses will be affected,” he says.

Network operators will give customers 12 months’ notice before sales of PSTN-based products and services end in their area. Nonetheless, it would clearly be wise to prepare for the switch-off in advance. The first step is to find out when and how your business will be affected, then consider which digital telephony and broadband services you might use instead. Some businesses may be able to keep using some current equipment, for example by plugging phones into a router instead of the old phone sockets. Others will need a full broadband connection upgrade.

Many businesses will face extra problems because other systems also run on the PSTN, including franking machines, security and door entry systems, fire or smoke alarms, CCTV, emergency phones in lifts, and some sector-specific solutions including telecare systems used by elderly or vulnerable people. In each case it will be necessary to contact manufacturers or service providers to see if and how systems can be replaced; some providers are already helping businesses through the transition. Businesses that face a more complicated transition may need to consult telecommunications specialists.

Risk and reward

The switch to internet-based systems will create some new risks as businesses become more dependent on broadband connections. Internet-enabled systems are also vulnerable to power cuts in a way that phone lines are not – although many of the systems that use the PSTN today also require a mains connection.

Service providers should be able to help businesses understand new system features that will help to manage these risks. For example, internet-based telephony can be integrated and synchronised with mobile or email services based on cloud infrastructure, so businesses can access their business line from any location using a mobile device. 

There are also cost advantages: calls made using VoIP tend to be cheaper than those made via the PSTN, as VoIP systems use monthly fees rather than charging by the minute. Hardware costs also tend to be lower, and it is more cost-effective to add new telephone lines than it was under the old system.

Integrated internet-based communications can be used to run videoconferencing, file sharing, instant messaging and other functions, making home working and other flexible working arrangements more straightforward. Working in the cloud also helps protect business systems from the effects of disruption that impacts the physical workplace, although it also increases dependence on cloud service providers.

Duncan Shaw, Operations Director at communications services provider Connectus, says that a business’s communications provider should be able to support it through the transition and help it understand whether it might benefit from using some of these other technologies. “Start talking to your provider now,” he advises.

“Take the opportunity to consider how your business works today. If you use hybrid working patterns, then VoIP offers a rich platform of features and benefits for your business. Your provider will deal with all the technical aspects of making sure things are set up correctly. This is key to making the transition painless.”

However, a November 2021 survey published by National Business Communications suggested that only one in five business owners were fully aware of the switch-off, with six out of 10 knowing nothing about it. BT will ramp up efforts to alert customers during the next three years, according to Chris Sims, Managing Director, SoHo and Marketing at the company. He says its research shows that businesses are worried about how quickly they might get a return on their investment in these systems.

“We are on a campaign to educate our customers on the benefits of the switch, such as enhanced flexibility, efficiencies, cash savings and increased mobility,” he adds, going on to say that BT’s website offers resources to help businesses, including advice on other affected systems, and that as the 2025 deadline approaches BT will provide extra support to smaller businesses, where required.

“Most of the advice BT is giving seems to be pretty good,” says Mr Russell. “But Ofcom and the government need to hold them to account, to make sure small businesses are aware that this is taking place and are making plans.” 

Infrastructure worries

Mr Russell also stresses SMEs’ need for fast, reliable broadband connections. The government has pulled back from an earlier stated ambition for everyone in the UK to have access to Gigabit-capable broadband connections by 2025 – but the pandemic has increased the need to work more quickly towards those goals, with more consumers using more online services of all kinds, and more businesses allowing employees to work remotely.

FSB research from 2019 suggested that 30% of small businesses could only access broadband download speeds of under 10MB per second, including 39% of those in rural areas. One in three said this was insufficient for their current needs, while 40% expected it to be insufficient for the future. A further 45% were experiencing unreliable voice connectivity, including 57% in rural areas. Of poor connectivity, 26% said they had lost sales as a result, 32% said it created difficulties when communicating with customers, and 31% said it hampered business growth.

The Foot Room runs two podiatry clinics in Longridge and Broughton, Lancashire. Directors Sarah Carroll and Jen Royle opened the Longridge clinic in 2010 and today the company has 12 employees. 

Even before the switch-off deadline came into view, PSTN-based telephony was limiting their work – for example, using a card machine blocked the phone line. It was clear that a new system would be needed when the company prepared to open its Broughton clinic in 2021.

A VoIP telephony system, alongside a broader, cloud-based communications solution by Preston-based internet connectivity, telephony and cybersecurity provider HM Network, means the same phone number can be used for both clinics, and receptionists can handle enquiries for either. 

“The phone screen tells us if a call is for Longridge or Broughton, so we know which clinic the patient is calling before we answer,” says Ms Carroll. “If a call isn’t answered it goes to the answerphone, and as soon as there’s a message there I get an email to let me know.

“It’s definitely cheaper. There are parts of the system that we don’t use yet because I haven’t had the time to sit down and look at its capabilities, but for now, it works – and the patients are happy.”

“A lot of the policy debate at the moment is about business productivity and economic growth,” Mr Russell notes. “Small firms adopting digital and technology solutions can have a huge impact on productivity – but only if they have decent internet connections.” 

In the meantime, Mr Sims stresses the need for small businesses to plan for the transition from the PSTN to digital technologies. “Those who haven’t yet begun could find themselves rushing as the deadline approaches,” he warns.

FSB’s Mr Russell sympathises with small business owners and managers who have not yet focused on this issue, as inflation, the energy crisis and the wider economic climate occupy most of their attention. “When you’re struggling for survival, you’re not going to be thinking about something taking place in three years’ time,” he says. But the benefits of preparation will be worth it, he insists. “If everyone was aware and had a plan, the switchover would be a completely good thing: you get better quality phone calls and higher internet speeds.” 

If you can spare the time and energy, start thinking about how the PSTN switch-off might affect you. You’ll have to confront it sooner rather than later, and it might give your business a timely boost.

Free small business resources

Learn new skills with the Federation of Small Businesses. Explore hundreds of jargon-free articles, guides, webinars, training opportunities and more, all designed for small businesses and the self-employed.

Find out more