Is the landline becoming obsolete?
The global telecoms landscape has changed dramatically in the last ten years as mobile phone ownership has boomed and internet telephony has taken off. Where once the landline telephone would have been the go-to appliance for making voice calls, now the vast majority of people in the developed world own a mobile or smartphone.
Businesses are also swapping fixed-line phones for Voice over Internet Protocol (VoIP) services to avoid call costs and enjoy the benefits of conferencing. Even consumers are choosing services like Skype and FaceTime over traditional landline phone calls to keep in touch with friends and family.
For now, the landline is hanging on. However, if current telecoms trends continue its days could well be numbered. Could the landline, like its long forgotten relative the public pay phone, become obsolete in the not too distant future? And should telecoms companies do something about it, or should they embrace the change and move on?
The growth of the mobile phone
Mobile phones have been around for some time now, but in the last ten years adoption has really taken off thanks to the arrival of the smartphone. Figures from Google's Our Mobile Planet report show that smartphone penetration in Germany stands at 40%. In the Netherlands it is 52% and in the UK 62% of people have one of these devices. The figures are even higher in Australia and Singapore, where penetration rates stand at 65% and 72% respectively.
Of course, that's just smartphones. When it comes to ordinary mobile phones, data from the International Telecommunication Union shows that last year mobile cellular penetration rates stood at 96% globally and 128% in developed countries, where there are more mobile phone subscriptions than there are people! These rates are likely to have risen since then.
But are people ditching landlines in favour of mobiles? Or are they using both? The latest statistics from the European Commission show that landline telephone access has been declining across the EU since 2009 and today 31% of households have one or more mobile phones but no fixed line. It's a similar story in the US where, according to the Wall Street Journal, Census Bureau statistics show that a quarter of households no longer have a landline but have mobile access. So it seems that in many cases, the answer is yes.
Calls over the internet
It's not just mobile phones that are pushing landlines out of favour. The growth of VoIP services is also having an impact on fixed line use as businesses and consumers choose to make free calls via the internet, particularly long distance calls which have traditionally been expensive via landlines.
The European Commission statistics reveal that 36% of households with internet access use free web-based services to make calls while at home, while 21% do the same using their smartphones, tablets or other handheld devices. In Australia, government figures show that mobile VoIP use increased by 73% between 2012 and 2013, while tablet VoIP use rose by 150%.
One of the main reasons why people are using these services instead of their landlines is because there are no call fees and the only costs are either those of internet access or the fixed charge levied by the internet telephony provider. And for businesses, choosing internet telephony over fixed lines gives them much more flexibility, as a VoIP system can be used anywhere there is an internet connection. It also allows them to enjoy the benefits of conference calling.
Thanks to the growth of mobile internet services, it is no longer a necessity to have a fixed telephone line in the home in order to access the web. This is yet another advance in technology that is contributing to the noticeable decline in landline telephone usage across developed countries.
Just as consumers and businesses are using their smartphones and tablets to make calls, they are also using them to get online. According to the European Commission statistics, the number of EU households with broadband internet access remained static at 60% between 2012 and 2013, while the number of households with at least one member with a mobile internet subscription has risen by 16% since 2011 to stand at 52%.
Mobile broadband dongles also allow people to access the internet via their PCs and laptops without a fixed telephone line, and there are also a number of internet services, including satellite broadband, that enable non fixed line subscribers to get connected to the web.
How are telecoms companies responding?
As more and more businesses and consumers cancel their landline services, traditional telecoms companies will either struggle or be forced to move with the times. The growth of mobile and internet telephony is eating into conventional revenue streams, and if they want to compete in today's market these firms will need to upgrade their networks and alter their business models to focus more on mobile and internet services.
Savvy telecoms companies will simply convert their landline customers into mobile and internet customers. To do this, they will need to make sure they are offering the best calls plans, internet speeds and added extras. This is particularly important for traditional telecoms firms fighting back against a new breed of competitors who are focusing solely on internet and mobile. Indeed, competition in the telecoms marketplace is fiercer than ever and only the strongest will survive.