Wireless voice services threaten to decrease future revenues of wireline services

Jan 1st, 1999

Wireless voice services threaten to decrease future revenues of wireline services

Continued growth and improvements in wireless communications?along with lower prices?mean that over the next decade, wireless will likely capture an increasingly large share of wireline minutes-of-use and, ultimately, wireline voice subscribers. In a new report by Technology Futures Inc., an Austin, TX-based telecommunications research company, the implication is a significant erosion of local-exchange carrier (LEC) landline revenues at the hands of wireless.

The research for the report was sponsored by the Telecommunications Technology Forecasting Group, a consortium of telephone companies composed of Bell Atlantic, Bell Canada, BellSouth Telecommunications, Cincinnati Bell, GTE Telephone Operations, Pacific Bell, Southern New England Telephone, Southwestern Bell Telephone Co., Sprint Ltd., and US West Communications.

According to the report, 25% of LEC voice access lines could be lost by 2005, with some of those losses being balanced by gains in data-access lines. LECs must aggressively pursue those opportunities that take best advantage of the strengths of their landline networks?namely, providing high-speed digital access, including Internet access, to the mass market. The question is whether data will completely augment the losses. The answer, says the report, may be for LEC owners to continue expanding their range of operations beyond the local exchange to wireless services, long distance, international operations, and more.

In the report, entitled Wireless vs. Wireline for Voice Services: Forecasts and Impacts, analysts from Technology Futures explore the competitive threat to the LECs from the emerging wireless alternative to voice communications. Also addressed is the competitive impact on the average remaining life of the LEC copper distribution infrastructure and the effect of the LEC transition to fiber.

Technology Futures believes that alternative voice-communications systems are, indeed, potential threats that may limit the remaining life of LEC voice-related infrastructure to no more than seven years. In fact, annual LEC net cash flow could drop by about 25% by year-end 2003 and become negative by 2010.

The report draws some interesting conclusions regarding the future of wireline voice services. In terms of usage-sensitive revenue, nearly 20% of the LEC market share could be lost by year-end 2001 and as much as 50% by year-end 2005. These revenue losses aren?t likely to be balanced by gains in data-communications services?representing a major challenge for wireline providers.

For more information or to purchase the complete 50-page report, contact Debra Robison at Technology Futures Inc., (800) 835-3887, fax: (512) 258-0087, or e-mail: pubsales@tfi.com. u

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