Will Fixed Network Voice Connections Drop to Zero?

The latest report on U.S. fixed network voice connections by the Federal Communications Commission suggests that voice connections declined three percent between June 2010 and June 2011. That raises an obvious question: will number of fixed voice connections continue to drop, without end, to zero?

That seems highly improbable. There would seem to be some good reasons for predicting a perpetual demand for fixed voice connections, not the least of which is that voice quality likely always will be higher, and more consistent, on fixed connections, compared to mobile or forms of VoIP that do not use managed connections.

But that isn’t the only reason. Much might hinge on how voice services are packaged and priced.

In principle, service providers can package fixed network voice service in ways that impose little incremental cost over not buying the service, or in fact tie the purchase of another network service to the voice service. That is not to discount the “add value” approaches, but simply to note that the easiest path forward is simply to make fixed voice service so affordable there is no reason to drop it.

Service providers will not like the gross revenue implications, but the simple matter is that if the value of fixed voice keeps dropping, compared to mobile voice, erosion will continue. On the other hand, if voice and perhaps other features are bundled with the “lead” broadband access service in ways that users find reasonable, massive erosion might be avoided.

Under the new Verizon Wireless pricing scheme, for example, though users can still use over the top messaging and voice, there is no financial incentive to do so, at least for domestic calling.

At some point, fixed network providers will probably reach the same conclusion, and package “broadband access” with voice features in ways that make paying for fixed network voice a reasonable and preferable option. You might argue that Charter Communications and Verizon’s landline business already have moved in that direction.

A new policy by Charter, and the Verizon “Share Everything” plans simply make voice a feature of a broadband service.

Charter is going to stop selling voice subscriptions as a discrete product, and will in the future only sell voice in conjunction with at least one other service, either entertainment video or broadband access.

Verizon, for its part, also requires bundling of a voice line with DSL. Charter is adopting similar policies.

"Going forward, we will not offer Charter Phone as a standalone product," a Charter spokesman apparently has confirmed.
    source: Allied Telesis

In principle, the bundling is akin to the ways consumers buy many other products. When you buy a PC, a tablet, a smart phone, an iPod or an automobile, you get a battery as part of the device. Both Charter and Verizon Wireless now are making “voice” part of a product bundle, a feature, essentially.

If, as some of us suspect, voice and messaging eventually will be features of a network access service, then the number of voice “lines” in service will stop falling, in line either with the number of broadband access or video entertainment accounts in service.

The point is that landline voice accounts will not decline, without end, even if consumer prefer to use mobile voice, so long as retail policies tie the use of other valued network services to a bundle that includes a voice service.