With more consumers ditching their home-phone service in favor of wireless, it would appear the landline is going the way of the dinosaur. Yet one landline segment is poised for growth: data services.
US landline data services are expected to post up to 4-percent revenue gains in 2012, according to Fitch Ratings. Overall, the telecom sector is anticipated to enjoy a stable year, in spite of forecasted increases in capital investment. Landline data providers in particular are expanding broadband availability as well as business and commercial services.
That’s good news for wired carriers who have seen subscriptions plummet in recent years. Standalone voice services are indeed a declining business. Wireless carrier productivity has risen approximately 20 percent each year for the past several years, compared to a more modest 3-percent gain for landline carriers. While both have made investments and outsourced some labor-intensive functions like operator services, the older and larger physical plants of the wired providers require more maintenance and support workers.
In addition, many wireless and cable competitors offer packages of services that include voice, high-speed Internet, and video. Customers perceive these services as more economical, of higher quality, and more satisfactory. On the other hand, carriers that traditionally offered home-phone service are successfully diversifying into data services, including high-speed Internet and TV, thereby utilizing existing infrastructure.
Landline data is far from an industry savior, however. Such growth could be impacted by continued weak employment and sluggish housing starts — both key factors in any landline carrier’s bottom line. Still, it’s not a bad move, especially if carriers can compete on price.