Who Moved My Fixed Phone?

Even as the global mobile subscriber base crossed 2 bn, a
significant portion of growth in mobile services is coming at the cost of fixed
lines

Wires may
not be dead but more and more people are finding nirvana in just going mobile.
Fixed lines are certainly passé for them. And no we are not talking about just
the green horns. Many of even those who grew up clinging on to the wires now
feel wireless' the way. While millions of the mobile phone subscribers across
the world are most likely to be first time phone users-especially in the
developing countries where mobile services have dramatically increased
teledensity-a significant portion of growth in cellular industry has come at
the cost of fixed line phones. In an increasingly dominant trend, a significant
number of subscribers are substituting their fixed phones with mobile phones.
And even if subscribers are keeping their fixed phones, they are less likely to
use it to make calls.

According to Yankee
Group's wireless global practice leader, Keith Mallinson, “low prices,
in-network calling and family plans, all influence the rising number of people
hanging up on landlines. They are using home phones less frequently and many are
'cutting the cord' entirely. Mallinson believes that wireless substitution
for wireline residential phone service is a significant and unstoppable trend.
He says that carriers should aim to capitalize on the movement toward personal
communications through one device on an anywhere, anytime basis rather than
resist the inevitable shift away from wireline communications.”

What Lies Ahead?

Angel Dobardziev, an
analyst with Ovum, says that even though few users are giving up their fixed
phones, evidenced by the relatively stable number of lines in the Western
economies, many new users are going 'straight to mobile'. “Actually a lot
of them, about 12% of the EU households, are 'mobile only', according to a
recent EU commissioned survey. This figure varies widely among countries: from
4% in Germany and Sweden, 6% in the UK, 16% in France, to a massive 29% of
households in Finland that use mobile as their only access method,” Dobardziev
says.

Some analysts argue
that fixed line operators with aggressive broadband plans can prevent their
customers from 'cutting the cord'. However, that too would not be of much
help as fixed line phones have another threat to deal with-VoIP. Many fixed
line operators today force their broadband customers to pay for fixed phone
subscriptions as well. With VoIP getting popular with the spread of broadband,
consumers are increasingly bypassing the traditional way of making calls. This
trend would further accelerate fixed mobile substitution.

The trend seems to
dominate both the developed markets with historically high fixed line
penetration as well as developing countries like India where fixed line
penetration is just 4.5%. Incumbent fixed line operators BSNL and MTNL have
regularly reported a drop in their fixed line base in recent years. In fact
India's mobile phone subscriber base surpassed fixed lines in the year
2004-05. Fixed lines grew by just 4.17% against 52% subscriber growth registered
by cellular services.

Growth in both
developed and developing markets would continue to come from mobile services.
However, while in the developing countries, because of existing low penetration,
the growth would be higher on account of millions of new subscribers. In the
mature mobile services markets, growth is likely to come from 3G and other
advanced wireless services.

The onslaught of new
killer applications will further catalyze the uptake of wireless. Applications,
especially on the mobile phone, will hold the key to a world free of wires. With
the 'phones' already turning to 'smart phones' the vision is not too
far.

Ravi Shekhar Pandey


ravisp@cybermedia.co.in