The Voice Revenue Problem

Only 70 percent of households in Marshall County, Indiana have landlines in 2011, a figure that is expected to decrease to 50 percent in the next two years. That statistic is one important facet of the voice services business: people simply are starting to use their mobile devices as their primary “phones.”

The other important angle is less usage of voice communications overall, on both mobile and fixed connections. According to Nielsen, the average number of mobile phone calls we make is dropping every year, after hitting a peak in 2007. And our calls are getting shorter: In 2005 they averaged three minutes in length; now they’re almost half that.

Also, in part because of the prevalence of VoIP services, unit prices are under pressure. Servive provider executives are no dummies. They know all that, and already are moving ahead with initiatives that will replace lost revenue and still provide a growth path.

But there are lots of thorny, practical issues. Consider investment. How much should a rational executive invest in a declining business? How much should it try to innovate? What is the balance between support for growing businesses and networks, and declining businesses? When does network investment become stranded? What should executives do about all that?

The Voice Revenue Problem

at&t Forecasts Strong 2008 Growth

In a forecast that, in some ways, resembles France Telecom's, at&t executives now say the company will achieve double-digit adjusted earnings growth in 2008. Where the forecast resembles France Telecom's projections is the full-year wireline segment, where at&t forecasts 2008 earnings before interest, taxes, depreciation and amortization in line with 2007. France Telecom executives recently projected 2008 cash flow consistent with 2007.

at&t also expects 2008 wireless EBITDA in the low 40-percent range.

For its U-Verse Internet-based TV project, at&t said it expects to reach more than one million subscribers by the end of 2008.

Longer term, at&t expects adjusted earnings growth in the double-digits and mid-single-digit or better revenue growth. That's another area where at&t and France Telecom have common views. Where 2008 might just keep pace with 2007, growth will accelerate after that.