Recent government data found that households spend $524, on average, on cell phone bills in 2006, compared with $542 for residential landline services. People are most likely spending more on their cell phone bills, telecom industry analysts say.

"What we’re finding is there’s a huge move of people giving up their landline service altogether and using cell phones exclusively," Allyn Hall, consumer research director for market research firm In-Stat told the AP.

The growth of wireless networks has made cell phones more convenient, and a variety of services, including text messaging, video and music has made it simple for people to spend money on their cell phone. "Frankly, I’d be shocked if (households) don’t spend more on cell phones at this point," said Andrew Arthur, vice president of market solutions at Mediamark Research & Intelligence.

When corporate cell phone use is included, overall U.S. spending surpassed landline spending a number of years ago, analysts say. There are about 170 million landlines in use around the country, industry officials project there are almost 250 million cell phones.

Eric Rabe, senior vice president for media relations at Verizon Communications, said the company’s wireless revenue has grown 15 to 20 percent annually over the last five years. Its landline business has been stagnant year to year, because more than 90 percent of U.S. households have one.

"As a company that once made the vast, vast majority of its revenue on phone calls, for 10 years we’ve been moving away from that and trying to re-establish ourselves in other businesses because we could see the traditional telephone was a mature business, it was not going to grow and indeed might even shrink," he said.
 

The average person who opts out of having a home phone line is under 35 years old with a small household and a lower income than the traditional phone user.

"The largest number of current cord cutters-those who do not have a landline, but rely solely on their mobile phone-are those one might expect: young, single, living alone, or sharing quarters such as a dormitory or rooming house," says Jill Meyers, In-Stat analyst.

"In many cases, these are people who are the least-likely candidates to have a landline phone."

Those who rely solely on mobile phone use 22 percent more cellular minutes than the average respondent, and 40 more than those not interested in dropping their landline. Twenty-four percent of those with a landline would consider replacing it with a mobile phone.

Those who would consider replacing their landline with a mobile phone have the highest penetration of family or group mobile rate plans, and they have the highest spending averaging $111.41 per month.

VoIP Gaining On Landlines

"VoIP is a genuinely disruptive technology; it is already changing the telecommunications landscape," says eMarketer Senior Analyst Ben Macklin, author of the new Broadband Services: VoIP and IPTV report.

Internet telephony grew quickly in 2006, due to the increased adoption of high-speed Internet, more awareness of VoIP and bundled options from service providers.

The Telecommunications Industry Association (TIA), VoIP users will account for one -third of all U.S. landline subscriptions in 2010, a 10 percent increase from 2006.

eMarketer projects that 46 percent of U.S. broadband households in 2011 will subscribe to a VoIP service, which would translate to 41.3 million VoIP subscribers.

"eMarketer expects approximately 30% of broadband households worldwide to subscribe to a paid VoIP service by 2011," says Mr. Macklin.

"In addition to paid subscriptions, millions of broadband households are regularly utilizing free Internet voice services from companies such as Skype, which recently reported 171 million registered users at the end of 2006, up nearly 100 million from a year earlier."

According to the TIA, 9.9 percent of all landlines in the U.S. were VoIP lines in 2006, and this will increase to 34.1 percent by 2010.

"Requiring considerably more bandwidth and technical know-how from service providers, IPTV is still in its infancy worldwide," says Mr. Macklin. "Nevertheless, it is on track to reshape a number of major industries."

Three areas are important for IPTV to grow and succeed, bandwidth, a workable regulatory environment and favorable TV market dynamics.

Currently France is the only country with over a million IPTV subscribers, so meeting the three requirements could be challenging.

"As a result," says Mr. Macklin, "unlike VoIP, which is likely to be universally attractive to broadband households, the growth of IPTV will be patchy across the globe."