An overwhelming majority of consumers across the United States are dropping traditional landline phone service, according to updated USTelecom analyses of national and state voice competition data. Based on national trends, by the end of 2015, the number of traditional landlines in service, including both residential and business lines, is projected to fall to 28 percent of its peak level for the year 2000, with residential lines falling to only 18 percent of peak levels. Also by the end of 2015, the portion of telephone households at the national level using only wireless phones for voice service is projected to surpass 50 percent and those using traditional switched lines will be approaching 15 percent, with only around 10 percent either mostly or exclusively using landlines from traditional providers, inaptly called “incumbent” local exchange carriers (ILECs) under telecommunications law and regulations. State data indicate that voice competition is a widespread phenomenon occurring across the nation, not just in selected areas.
The updated analyses, based on landline data from the Federal Communications Commission (FCC) and the most current available national wireless data and state wireless data from the Centers for Disease Control (CDC), emphatically support USTelecom’s recent petition to the FCC seeking regulatory modernization. In the petition, USTelecom asks the FCC to forbear from applying archaic regulations that divert spending to narrowband networks and perpetuate inefficient legacy network architectures. Instead, USTelecom seeks to shift resources to modern advanced networks expand broadband investment and competition for the benefit of American consumers and businesses. The regulations USTelecom identified in the petition are premised upon outdated network designs, market structures, and assumptions about the dominance of traditional voice telephony providers.
Clearly the data show that with the growth of mobile voice and broadband-enabled Voice over Internet Protocol (VoIP) alternatives, it no longer makes sense to classify traditional landline providers as dominant in voice service. Based on the FCC year-end 2013 data, including VoIP and mobile options, traditional landlines represented only 15 percent of connections. This percentage rises to only 17 percent when including ILEC VoIP. Based on trends, by the end of 2015, traditional landlines will represent only 11 percent of voice connections and only 14 percent if when including ILEC VoIP.
Household adoption data tell a similar story. Among telephone households, more than 90 percent had wireless service and 43 percent used only wireless telephones for voice service. In remaining telephone households, 30 percent were using non-traditional services such as VoIP via broadband, predominantly from cable companies. This means only 27 percent of telephone households were using traditional landlines as of year-end 2013. When taking into account customers who have both wireless and landline phones, but use their wireless phones mostly, the portion of customers relying either exclusively or mostly on traditional landlines will be only 11 percent by the end of 2015.
At the state level, as of 2012, there was not a single state in which landline telephone service from a traditional voice provider was used by more than half the households — the range was 22 percent to 45 percent with a median of 32 percent. While the most current state data are available only through 2012, it is very likely that state-level trends are, in varying degree, in line with the national trend of declining ILEC switched shares through 2013 and beyond.
Consumers have moved on, and within a year or two, half will be wireless-only, these latest data indicate. It is time to acknowledge the competitive impact of wireless and broadband in voice communications and adjust regulatory frameworks accordingly. As Professor John Mayo, a respected economist, noted in a declaration filed with USTelecom’s regulatory modernization petition, “The rapid evolution of consumer behavior now warrants the affirmative finding that wireless services presents a substantive, viable and economically constraining influence on the behavior of wireline telephone providers.” In another declaration filed by a respected economist with this petition, Dr. Kevin Caves, concluded, “…the available evidence shows clearly and unambiguously that wireless voice service has evolved into a competitive alternative to wireline service” and “ILEC wireline voice offerings face widespread competition, with prices disciplined by a range of competitive alternatives, including wireless telephony, cable voice, over-the-top VoIP, and offerings from Competitive Local Exchange Carriers.”