Demand for Fixed Network Voice Lines is Lower than Many Think

Consumer demand for fixed network voice connections arguably is substantially lower than one might conclude from units sold to households. In some markets, purchase of a voice line is required if a customer wants internet access (United Kingdom buyers of retail landline service from BT or any BT wholesale customers, for example).

In other markets, such as the United States, voice typically is sold in a bundle that offers substantial discounts for buying three bundled services, making purchase of a voice line a feature of service often primarily purchased for internet access and video entertainment.

Also, global development experts believe mobile and internet are, in any event, the key services to monitor, not fixed line voice.

The key observation is that many consumers must buy a fixed network voice service in order to buy internet. The question is how demand would be affected if that requirement were not in place.

One survey found that between 25 percent and 40 percent of U.K. consumers “do not know their own phone number.” Also, more than 50 percent of U.K. survey respondents report they ‘rarely’ or ‘never’ use their landline phone to make personal calls, Relish, a wireless internet access provider, says.  

Perhaps 36 percent of respondents only use their landline voice line once a month or less, Relish has found.

If only half of those respondents--if given a chance--would abandon voice lines, then take rates for landline voice might drop between 12.5 percent and 25 percent. But it might also be the case that up to half of present buyers seen very little utility in their landline voice connections, suggesting that as much as half of all present demand is artificially inflated.

There are analogous trends even in the mobile business. Many leading U.S. mobile plans, for example, offer unlimited domestic calling and text messaging for a lowish flat fee, with revenue driven primarily by purchases of mobile data. One might infer from those practices that the “value” of a mobile voice or messaging capability is relatively low, compared to access to mobile data.

That is not to say the voice and messaging features are unimportant; only that they are commodity features. Few consumers likely would buy a mobile service that did not include voice and messaging capabilities, but equally few are likely to prize those capabilities. The analogy is an automobile without tires. Tires are necessary, but few consumers think about them when buying a car.
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