Landlines No Longer a “Dominant” Service

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Landlines No Longer a “Dominant” Service

December 4, 2015 Uncategorized 0

Landlines No Longer a “Dominant” Service

The portion of U.S. households using landlines for voice service has fallen below half for the first time, according to the latest data (link is external) on household voice telephony choices from the Centers for Disease Control. This is because more and more American households are cutting the cord for voice services and using only wireless telephones. Based on a USTelecom analysis of the new CDC data, by the middle of 2015 the U.S. likely reached the cross-over point where more than half of telephone households were wireless-only and less than half used landlines. In any case, the U.S. almost certainly will have reached that point by the end of this year. As Federal Communications Commission (FCC) Commissioner Mike O’Reilly suggested in a recent blog (link is external), traditional wireline voice carriers are no longer dominant providers and should not be singled out for more burdensome regulation.

The latest CDC wireless data adds to the mounting pile of evidence that wireless voice is a competitive alternative to landlines, and traditional landline providers are no longer dominant. The semi-annual CDC wireless survey estimates that 49.3 percent of U.S. households were using landline voice service during the first half of 2015 while 47.4 percent were wireless only and 3.4 percent had no telephone service. In analyzing this semi-annual CDC data, it is necessary to make a couple of minor adjustments. First, the survey data were collected throughout the first half of 2015, so they reflect approximately the midpoint of the first half of the year. Second, the CDC figures are given as a percentage of total households. But, households with no phone service should not affect an analysis of the choice among telephone households to use landlines or to use wireless only. The denominator should be telephone households. Based on these adjustments, by mid-2015, just over 50 percent of households were wireless-only and just less than 50 percent used landlines for telephone service. If trends continue, by the end of 2015 nearly 52 percent of telephone households will be wireless-only and just 48 percent will use landlines.

Moreover, the CDC data do not address the additional competition occurring among landline providers. According to FCC data (link is external), in 2013 the majority of landlines still in use had migrated to voice over Internet Protocol (VoIP) technology, mostly from cable operators. USTelecom has projected that by the end of 2015, only 15 percent to 20 percent of U.S. households would be using traditional “switched” landlines from a telephone provider. While it is difficult to validate the projection precisely since the 2013 FCC landline competition data have not been updated recently, these new CDC wireless data along with landline competition trends suggest that the projections are accurate.

As Commissioner O’Reilly noted in his blog, USTelecom filed a petition in 2012 asking the FCC to declare that traditional wireline voice providers are no longer subject to dominant carrier regulation.  Last year USTelecom filed a petition asking the FCC to forbear from selected legacy regulations in order to encourage more investment in modern broadband networks. The 2014 forbearance petition included declarations by expert economists who argued that wireless voice service had become a competitive alternative to landline service. The new CDC data, along with wireline competition trends, provide clear indicators that wireless is a competitive voice alternative and that traditional wireline providers are no longer dominant and should not be singled out for burdensome regulations.

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