From: Norm Jacknis (norm@jacknis.com)
Date: Wed Jan 02 2002 - 22:19:59 EST
Interesting article about where voice communications is going.
Happy New Year!
Norm
-----Original Message-----
http://www.newsbytes.com/news/01/173261.html
More Cell-Phone Users Cut Ties To Traditional Service
By Yuki Noguchi, Washington Post
WASHINGTON, D.C.
28 Dec 2001
Insana Collins couldn't afford to spend more than $50 a month on her phone
bills. So when the recent college grad moved out of her mother's Largo, Md.
home a year ago, she decided not to get a phone line in her first apartment,
in Upper Marlboro.
She got a cell phone instead.
Installation and the deposit on a land line from Verizon Communications Inc.
would have set her back about $125, then $40 a month for service, said
Collins, a 24-year-old who graduated from the University of Maryland and now
works as an editor of federal documents.
By comparison, she can talk on her Sprint PCS phone for nearly 3,000 minutes
a month for $50, which includes long-distance calls.
There's no point to having a home phone when she's seldom at home, she
concluded: "It wasn't really rocket science to figure out that I would be
paying twice as much for a service I don't use."
More consumers are behaving like Collins, making cell phones their primary
line, and in some cases abandoning their land lines altogether. About 2.2
percent of people in the United States have done away with their regular
phone service and depend totally on their cell phones or other wireless
devices, according to the Cellular Telecommunications & Internet Association
(CTIA), a trade group based in Washington.
Although it is still nascent, the phenomenon marks a sea change for the
telecommunications industry and for residential customers, who traditionally
haven't had a choice for local phone service. Until it was broken up by
court order in 1984, American Telephone & Telegraph Corp. was a monopoly,
running its copper wires into any home that wanted phone service. Now those
wires are controlled by regional providers such as Verizon and SBC
Communications Inc. Although the local phone industry was deregulated in
1996, the vast majority of companies entering the market built networks to
serve business clients, which are more profitable than residential
customers. But now six national cell-phone carriers are engaged in a price
war, meaning it's sometimes cheaper to opt out of land lines.
The movement is possible in large part because intense competition among
wireless carriers has driven the monthly price of cell-phone service down 39
percent over the last decade. More important, flat-rate plans offering
thousands of minutes of talk time a month have encouraged people to use
their cell phones more frequently, and for longer periods of time. The total
amount of time Americans talk on their cell phones is increasing 75 percent
every year, according to the CTIA.
Even families can go all wireless, all the time, without multiplying their
phone bills. Most carriers now tout plans designed so that family members
can have their own phones but draw from the same bucket of minutes.
That type of plan made it possible for Fabiana Quinonez to buy three cell
phones so that she and her husband can keep track of their 16-year-old
daughter, Sonia.
"We wanted to know her whereabouts," Fabiana Quinonez said. Doing away with
the hassle of pay phones and calling cards was worth the $120 a month it
costs to get unlimited service within their hometown of Phoenix, she said.
Laurel resident Tracey Childress kept her home phone line only because she
needs it to connect her computer to the Internet.
For $79 a month, her Nextel Communications Inc. cell phone gives her the
features she used to pay extra to get on her land line: voice mail, call
waiting and caller identification. In addition, she no longer pays
separately for long-distance.
There are some trade-offs: Sometimes rain causes a bad connection, her calls
occasionally get cut off, and she has to make sure she doesn't exceed her
allotted minutes. But on balance it's been a wise decision, she said. "I
think I am saving money, not so much on local, but on long-distance," said
Childress, a computer assistant who also likes getting her calls when she's
on the road.
Some wireless phone companies-particularly those that don't have a land-line
business to cannibalize-explicitly encourage this practice. VoiceStream
Wireless is running a television ad showing a man talking on his cell phone
while using his cordless home phone to play fetch with his dog. San
Diego-based Leap Wireless International Inc. and Alltel Corp. of Little Rock
are among companies that offer unlimited local calling, mimicking the access
a land line provides. Other companies, including Verizon Wireless and
Arlington-based TeleCorp PCS, have conducted tests of similar services in
New Orleans and Memphis.
About 7 percent of Leap's 1 million customers have "cut the cord" and no
longer use land lines, said Sarah Thailing, a spokeswoman for the company,
which markets its service under the Cricket name. About 61 percent of Leap's
customers use their phones as their primary line, using their land lines
only for Internet connections, she said.
Allowing virtually unlimited local service poses technical and financial
challenges for wireless carriers trying to manage the traffic on their
networks. The more traffic, the more airwaves or cell towers the carriers
need, but airwave spectrum is very limited, and carriers are already pinched
for cash. Adding cell towers can be difficult in suburban neighborhoods,
where zoning boards and community groups have sought to block their
construction, citing aesthetic or health reasons.
TeleCorp, a wireless company with over 900,000 customers in the Southeast
and Midwest, considered offering unlimited local service in Memphis two
years ago. The experiment fell flat, said Gerald T. Vento, chief executive
of the company, which was recently acquired by AT&T Wireless.
"There is no way to make it profitable," Vento concluded. Building up the
network costs a lot of money, and it's hard to make that investment pay off,
he said, because all-you-can-use services tend to attract customers with bad
credit records.
Going all-wireless made basic economic sense for Alex Story, however, who
switched off his land line two months ago for the convenience and the
savings.
"It finally dawned on me that I really didn't need a land line anymore,"
said Story, a 27-year-old Alexandria, Va. resident who had been paying
monthly bills for land-line and cell-phone service for several years.
It's only in the past year or so-when prices for cell-phone calls went down
dramatically-that Story started to use the wireless phone as his primary
line. Now friends don't call his land line, and he's connected to the
Internet through a cable modem, so he figured he could use the $30 a month
elsewhere.
"It's sort of a no-brainer, from my perspective," he said.
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