CUTTING THE CORD
September 1, 2009
Telecom operators are seeing customers abandon landlines at a rate of 700,000 per month. Some analysts now estimate that 25 percent of households in America rely entirely on cell phones -- a share that could double within the next three years. If the decline of the landline continues at its current rate, the last cord will be cut sometime in 2025, says the Economist.
The decline in landline use, which has been under way for several years, has picked up speed in recent months; in the first half of 2005 only 7.3 percent of households were cell phone-only (CPOs). By the end of last year the proportion had reached 20.2 percent -- increasing by 2.7 percentage points in the second half of last year alone, the biggest-ever increase.
However, all this wouldn't matter much, were it not for the fact that many businesses depend on landlines, says the Economist:
- First to suffer are telemarketers; cell phone numbers are harder to get hold of, and in most cases it is also against the law for telemarketers to call them.
- Second, the growing number of CPOs is causing trouble for polling firms as they are twice as expensive to reach and pollsters don't know much about them.
- Then there are the telecom operators themselves, although they surprisingly don't seem too worried about losing landlines.
- Verizon, for instance, serves nearly 20 million landline customers in America's north-east, but is also the country's biggest mobile operator with 87.7 million subscribers and is investing billions in a new fiber-optic network which reaches 2.5 million homes.
So regulators will not just have to decide whether to subsidize or bail out landline firms, they will also have to make sure that public goods delivered via the old telephone network continue to be provided, says the Economist.
Source: Editorial, "Cutting the Cord," The Economist, August 13, 2009.
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