nnections. "Overall, by 2007, the U.S. IP telephony market is forecast to grow to over 5 million active subscribers," says In-Stat/MDR's Schoolar. "While this shows a fivefold increase in subscribers over 2002, it still lags U.S. plain old telephone service (POTS) with over 100 million households." As interest in VoIP grows, the private line business suffers. Once the cash cow of data transport, the future of private line services is in jeopardy as the world slowly migrates to IP. Whereas the bottom hasn't yet fallen out on private line expenditures (U.S. businesses spent roughly $23 billion on private line services in 2003, up about 4 percent), In-Stat/MDR expects that growth will stagnate in the near term, with this market facing an eventual and pro- nounced decline in the long term. "The reality is that the public network is migrating to IP, meaning tradi- tional circuit-switch private lines will need to migrate as well," says Kneko Burney, In-Stat/MDR's chief market strategist. Today, the most common migration path is primarily to switch to a high-end version of DSL, such as HDSL, and this is likely to escalate over time as DSL reach and capabilities broaden. "However, this migration will be gradual," says Burney, "meaning that the T1 businesses will experience a long, slow, and possibly painful exit as replacement escalates-similar to that experienced by long distance and now, local phone service." Burney believes that traditional T1 providers may be able to manage the erosion through innovation-meaning stepping up plans to offer integrated T1 lines-and by focusing on specific segments of the market, like midsized businesses (those with 100 to 999 employees). "According to In-Stat/MDR's research, respondents from midsized businesses were somewhat less likely than their peers from both smaller and larger firms to indicate that they were planning or considering switching from T1 to integrated T1, cable, or S, H, or VDSL alternatives," says Colin Nelson, an In-Stat/MDR research analyst. 5.2 THE NEXT INTERNET To