Cutting the Cord for Mobile Phones

The ranks of those cutting off their traditional, land line telephone service in favor of only wireless telecommunication services are growing, with some reports putting the figure at over 10 percent of wireless users.

While most analysts doubt much more than 8 percent of wireless users — mostly college-age students or younger — are ditching their wireline and buying bigger wireless packages, they agree that the percentage is on the rise and helping to drive better wireless coverage and capabilities.

Still, the consensus on regular phone replacement among industry observers seems to be that there will always be a place for the land line, which is used for Internet access and is widely viewed as a key component of “home,” where the breakups and hangups typical of wireless phones are absent.

“When it’s all said and done, I’d say a quarter will go wireless and cut the cord,” Ovum wireless telecom vice president Roger Entner told TechNewsWorld. “That means another three-quarters won’t. The land line will live on simply because there’s a need to call family. You want to reach the residence. If you’re an 18-year-old college student and the bar is your living room, why have a land line? As soon as you have nesting and being risk averse, that is a big impetus for wireline.”

No Big Deal?

Entner acknowledged strategic efforts by companies such as Metro PCS and Leap Wireless that are targeted specifically at wireline replacement and agreed that recent growth shows the trend has momentum.

“From five years ago of nothing, 7 to 8 percent is pretty strong,” he said.

Nevertheless, Entner also referred to the limitations of land line disconnection, and added there are still complaints about cell phone coverage.

“A ton of people are really bitching about coverage,” he said.

The analyst said on a micro level, wireline telephone replacement with mobiles is significant in that traditional phone companies lose customers, who typically get a larger wireless plan for a primary phone. However, the replacement factor is “just a side benefit” to the bulk of wireless carriers, Entner said.

“On a larger scale, it’s a US$110 billion market,” he said. “For the wireless industry overall, it’s not a big deal.”

Home and Office Battle

Yankee Group analyst Adam Zawel said with the average wireless user talking an average of 700 minutes a month, mobile phones have managed to claim a lot of talk time.

“Increasingly, they’re using [mobile phones] in their homes and in the office,” Zawel told TechNewsWorld. “Obviously, there’s no land line replacement in the car, but the battlefield is in the home and increasingly in the office.”

Zawel said despite the increased reliance on mobile phones, it is tough to get people to totally abandon their land lines for a number of reasons, particularly because of Internet connectivity from the home or office.

Zawel said land line replacement, which could be important for cable companies and wireless companies teaming to displace local phone carriers, is important to wireless vendors because they are looking to increase the 700 minutes-per-month average.

“I don’t see that growing unless you get more replacement,” he said.

Zawel added land line replacement may be bolstered by newer technologies, such as a combination of mobile phone and wireless LAN, which would provide clearer, WiFi connectivity in the home through the same cell phone that can go mobile.

“They’re all trying it,” Zawel said of wireless carriers, adding that he expects phones capable of such service by the end of the year, with actual service offerings still a ways off. “The business model for that is very uncertain.”

How Much Can We Talk?

Gartner research vice president Phil Redman told TechNewsWorld his firm’s surveys reveal that wireline replacement with cell phones is only 2 to 3 percent, making it a relatively small, niche trend in his eyes.

“There’s never really growth,” he said. “[The surveys] have never really changed. It’s fairly niche to get rid of a land line and go wireless.”

Redman added that the low cost of wireline telephone connections — made even lower with new voice over Internet protocol (VoIP) solutions — as well as coverage and battery life concerns with mobile phones, will keep land line replacement relatively low.

“Because of coverage and other communications tools such as instant messaging, the cell phone [use] will grow, but I don’t know how much it really means,” he said. “How much more can we talk?”

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