Wireless Spending Exceeds Landlines

    December 18, 2007

With more Americans ditching their landlines, 2007 is on pace to be the first year in which U.S. households spend more on cell phone services, according to industry and government officials.

Wireless Spending Exceeds Landlines

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.