Up to 50% of Residential Wireline Vulnerable to Wireless Conversion by 2010, Says pulver.com --
Local wireline price increases and cell phone competition obtain 35% price advantage for wireless
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Story Filed: Wednesday, March 13, 2002 2:42 PM EST
MELVILLE, N.Y., Mar 13, 2002 (BUSINESS WIRE) -- An update to an earlier pulver.com study reveals that ongoing price increases for local service and on going decreases for cell phone services give wireless a 35% price advantage up from a 1% advantage only one year ago.
The report, entitled "Telephony Unplugged", compares the monthly charges for wireline service provided by Verizon with wireless service provided by Nextel. The report points out that in the 16 years since the FCC issued the first cellular license the competitive wireless industry found ways to discount the cost of their services 92% while the cost of local calling rose 72% along with inflation. "The wireless industry has erased the 20 fold wireline price advantage that existed in 1984 completely changing the business case for who represents a potential wireless customer," noted Jeff Pulver, CEO, pulver.com.
The findings indicate home users might now choose wireless over wireline, in particular, for second lines to save money and obtain mobility for free. "If only 10% of residential telephone customers convert to wireless it will double the size of the wireless industry," said Daniel Berninger, Managing Director, pulver.com and principal author of the report. The emergence of the home wireless conversion business creates a dilemma for the incumbent local exchange carriers Verizon (NYSE: VZ), SBC (NYSE: SBC), and Bell South (NYSE: BLS). In order to maintain dominance of the wireless marketplace and profit from wireless conversion, they must ruin their even more profitable local service monopolies. Residential wireless conversion also further reduces the consumer long distance traffic base that remains a significant revenue source for AT&T (NYSE: T), World Com (NASDAQ: WCOM), and Sprint (NYSE: FON).
Cell phones cost over $3000 and airtime cost more than $1.30 per minute in 1984. Carriers ended their first year with fewer than 100,000 customers in the US. Inexpensive handsets now allow carriers to distributed many cell phones for free. Airtime that can go for 10 cents per minute helps attract 67,000 new customers per day. The industry serves over 100 million subscribers, generates 50 billion dollars in revenues, and continues to grow at over 20% per year. The emergence of the wireless industry created 160,000 jobs
"As long as wireless remained even slightly more expensive than wireline, the status quo seemed stable with people favoring use of wireline phones over wireless phones where possible, " said Daniel Berninger. The FCC Report, "Trends in Telephone Service", estimates total local wireline revenues of $104 billion. The CTIA Wireless Survey estimates industry revenues in 2001 of $55 billion. Continuation of historical wireless industry 20% growth rate suggests wireless revenues of $77 billion for 2003. If an additional 25% of residential customers convert to wireless as the least cost alternative, it will yield an additional 26 million customers for the wireless industry. These new subscribers represent a potential $14 billion revenue windfall given the CTIA Wireless Survey average monthly local bill of $45. The outcome means annual wireless revenues of $91 billion and an associated retreat of local wireline revenues to $90 billion by 2005.
About pulver.com:
Jeff Pulver founded pulver.com at the end of 1994. In addition to producing the highly successful VON conferences, pulver.com is engaged in many activities that promote growth in communication technology. The pulver.com website (http://pulver.com) is a key source of information for those in the IP Communications industry. Jeff Pulver's The Pulver Report ( pulver.com ) is a widely-read source of information on the latest developments in emerging net technologies.
CONTACT: pulver.com
Daniel Berninger, 410/279-1220
dan@pulver.com |
