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Media Center

Carriers use pricing to signal obsolescence

Enterprises often wonder when a trusted service based on a familiar technology will be turned off by their carrier.

This fear has been stoked by an AT&T move that appeared to ask the government for permission to schedule retirement of the legacy telephone network.

Smaller carriers will often announce the end of a service or start contacting customers with contract language setting a firm date for the end of a service. Sprint has grown comfortable setting “dates certain” for the end of services such as frame relay. But when dealing with the biggest carriers – namely AT&T and Verizon – waiting for a formal announcement, contract amendment, or regulatory filing is not that useful.
AT&T and Verizon’s installed bases are so large that it behooves them to keep legacy services going for the revenue streams they provide, even after the carriers have stopped investing in them.  The way you’ll know that these carriers are planning to discontinue a service is that their pricing will stop making sense. It’s called a “migration strategy,” and it works (for the carriers).
 In rate reviews the carriers will refuse to move prices for years at a time. In RFPs and RFIs prices will be proposed that bear no logical relationship to similar bandwidths for newer services, and in some cases the carriers will actually propose price increases. New orders will either be barred, or pricing for new locations on the same service will be paired with a more attractive-looking alternative.

Be alert for these pricing signals, and start planning for network migration when they appear.