Landlines – Tell me, how does this end?

Doug Mohney — Thu, 30 Oct 2008 09:23:10 -0400

Wall Street analysts continue to obsess over landline losses. Stop the madness already! "Tell me, how does this end?" is the real question worth examining.

Voice phone line losses have been on a downward spiral for years, but every quarter the numbers increase, there's more gnashing of teeth, pounding of the chest, more gloom and doom. It's fair to say that for the next five years there still will be more landline losses. Households are economizing by switching to cell phones and cable triple-play bundles with VoIP tucked in, while Millenials aren't even considering traditional voice service.

Ask the hard question: What fraction of wireline's traditional consumer customer base will have home phone lines in five years?

Millenials will say "Zero," but they need to be forgiven for their youth and inexperience. Cellular service is not universal or ubiquitous by any stretch of the imagination and for various safety and comfort reasons, the old POTS RJ-11 still has a good bit of legacy left to it.

Is the real answer fifty percent? Twenty percent? I don't know, but it would be interesting to have AT&T, Qwest and Verizon provide an answer and the logic behind it. Rural carriers (see Embarq/CenturyTel) will have a slightly different answer since cell towers aren't as ubiquitous outside of the Big City.

In other words, tell me how this ends.

At some point, losses will slow, if not level off to a steady pace. Farther down the road, phone companies will provide actual incentives for people to turn off their old POTS lines and switch over to broadband or wireless voice alternatives, because it will be too expensive and too much of a headache to keep the old gear in service.

Free phone service for a year in exchange for turning off your copper? The day may come sooner than anyone thinks.

VoIP has a big role to play in home communication service if femtocells don't squish out SIP handsets with "Lite" web browsers. Casabi has been the leader in innovating SIP home phone services and did a deal with Embarq earlier this year; they were also flirting with AT&T two years ago at CES.

So, tell me, how does this end?

- Doug

VoIP, Cellular bite U.S. fixed-lines hard

Doug Mohney — Tue, 20 May 2008 18:45:59 -0400

Over 16 million U.S. consumer VoIP lines were in service by the first quarter of 2008, according to new data released by TeleGeography, representing nearly 14 percent of all households and 27 percent of broadband households. Meanwhile, data released by the Centers for Disease Control (CDC) says in the last six months of 2007 at least 16 percent of U.S. households have one or more cell phones, but no landlines.

Since 2005, the RBOCs--AT&T, Verizon and Qwest--have lost over 17 million residential telephone lines, with more than 80 percent of new VoIP subscribers tapping into the services of cable companies.

A chart illustrating the losses and gains around fixed and VoIP could best be described as the cone of pain for RBOCs; VoIP subscribers are going up nearly as rapidly as fixed line subscribers are departing so there's a nice upward line for VoIP and a downward one for RBOCs on a year to year basis.

RBOCs are fighting back against cable with their own triple-play offerings, but they have a long way to go to recapture subscribers. Verizon had over 18.8 million subs to its FiOS fiber offering in Q108 while AT&T 379,00 U-Verse broadband and video subscribers, including 4,000 VoIP subscribers.

The CDC started getting into landline vs. cell phone numbers because it asks for follow-up contact information when conducting surveys. Government statisticians are concerned wireless phone users are a different "representative population" when compared to landline users, skewing survey data. Landline phone penetration is about what it was in the early 1960s and the numbers will continue droppings as the 18-29 set continues to abandon landline usage.

Take heart if you do have a landline. Wireless-only adults were more likely to report having engaged in binge drinking and to smoke and less likely to report being obese; also twice as likely not to have health insurance. Of course, since this is the 18-29 demographic, the skew here is apparent.

For more:
- TeleGeography report on RBOCs losing landlines
- CDC study on wireless usage reviewed by the Wall Street Journal

Related articles:
Comcast takes video hit, but adds telephony subs
Qwest earnings drop as landline losses swell
DT posts earnings boost, landlines decline 6.3%