Fixed-line revenues are taking a new hit

Fixed-line revenues are taking a new hit

What Infocom GmbH found is not a real surprise. For recent years, incumbents, and specially in Europe, are loosing ground and market share. Traditional landline usage has been the incumbents' historical cash cow, but with the opening of the market, increased competitive pressure, fed by pro-active regulator policies, emergence of alternative service providers, such as cable, VOIP and mobile operators, their fixed-line revenues are taking a hit. Mobile penetration is about 90% across Western Europe and users are progressively (but yet slowly) shifting their voice calls from landlines to mobile. In all major countries the number of landlines are decreasing at an average speed of 2% to 3% a year (about 5% to 6% in the US). Of course, incumbents have tried to react: new services (triple play, broadband, ...), new network architecture (NGN), fixed-mobile convergence and bundled services. But up to now, the result has been relatively poor. Infocom found that the pace of their market share declines has been accelerating. While major incumbents experienced a 1% market share decline in 2002-2003, now decline is more around 2%. In the US, most fixed-line operators were, are or will be trying to shed significant numbers of lines, but up to now failed to get a good price. Keeping the lines can, however, have an upside for an operator. First it protects the direct access to customers, and second, broadband lines could be valuable as the companies turn to the Internet to deliver phone and television.
Is fixed-line business worth to be in long-term? Will new services balance the trend? Million-dollars questions!