What’s the point of a home telephone?

Forgive me if I’m grumpy but I had a bad night. At 5.30 this morning our home phone went. Assuming it was some family emergency my wife ran to pick up to be met with a recorded message telling her about an opportunity to review her personal pension. And so the home telephone, the great liberating technology of the 20th century, continues its decline into irrelevance. Moreover, it’s not just irrelevant, it’s becoming an active nuisance.

Where the mobile phone is like a sparkly new shopping mall full of the latest must-have goodies, the landline is, by comparison, the flyblown high street where most of the shops are boarded up. Forgive the anecdotal evidence, but among my friends and acquaintances, all important conversations now happen on the mobile device. Ofcom’s data supports this idea of a mass migration, in the UK at least. Even elderly relatives (my mother-in-law) are now able to buy for a modest cost, a monthly allowance of minutes that enables them to indulge in long conversations with family members (my wife) without fear of billshock. The landline, on the other hand, is now abandoned, (for millions of users in the UK at least) and monopolized by ambulance-chasing chancers peddling unwanted financial products. At 5.30 in the bloody morning.

Mobile devices and packages evolve at an impressive rate, as anyone who has upgraded their phone at the end of a 24 month contract will have noticed. Within the connected home, broadband speeds have increased, while pay-TV providers have also been upgrading and improving their services, adding multi-screen services, apps and catch-up services to ensure they remain competitive. In that period, landlines have barely evolved at all, yet in some cases still account for 30%, 40% or even 50% of the total triple-play bill. That is simply unsustainable.

Other colleagues at Informa are better placed to advise and comment on Telco strategy. My wider interest is in finding business models within the telecoms and media space that are broken, and to see how companies are reinventing themselves to remain relevant and profitable. With the home phone becoming increasingly marginal to consumers’ lives, a huge hole could yet be blown in operators’ businesses. This is not in itself a surprise. What may yet surprise Telcos, however, is the rate at which this change is happening.

Comments
  • Sue Uglow November 1, 2012 at 9:54 am

    Please don’t forget that there are still lots of us in the UK who don’t have coverage on 2G networks, let alone on 3G or above. Even with a femtocell, fixed phones (with DSL and WiFi) are still more relevant for those who live in remote areas, work from home, download stuff onto WiFi-enabled devices, watch streamed IPTV etc than a smartphone. Fixed phone costs can now be much lower than mobile for comparable bandwidth and data consumption patterns. You try finding a streamed IPTV service on a mobile phone contract for £4 a month and an unlimited broadband connection at £13 (plus line rental). At that price, I can live without all the mobile fancy apps that are mostly irrelevant anyway.

  • Gregor McElvogue November 1, 2012 at 8:40 pm

    Ask the folk without power in New York after hurricane Sandy the value of a POT connection. Plain old telephones just work – they don’t need power and unless the greater network is affected they are more reliable lifelines in times of emergency than any communication device that depends on the 240/110v electrical grid.

  • Paul Southern November 6, 2012 at 10:52 pm

    That telco’s presence in the home was accelerated when they decided to offer nothing more than voice and (later) a data pipe. The open-door for value-add let in a myriad of solutions to consumers benefit and confusion and therein the opportunity for Silicon Valley and Shuzhou. The attempts at television are a stopgap but put the telco into the ring with networks, content owners and aggregators/distributors with global reach. Just like voice-to-location, the video-to-location they offer is already challenged by mobile solutions. Had telco’s offered home-server, security or automation or backup solutions or ways for households and families to communicate and share memories or something else of value they might still be in the home. They can still do this but it takes a vision beyond the norm.

  • Roger Stanyard November 7, 2012 at 12:29 pm

    BT is in a position where, increasingly, it can’t even give away fixed line telephony. The broadband deal I have with BT includes free calls anywhere in the UK anytime. So far in the last six months I’ve received just three proper calls but dozens of sharks offering PPI recover, wrong number calls and cold sale calls. I’ve made 2 calls on it. Everything else is either mobile or Skype if to abroad.

    So, even with free calls, there is no real benefit from using a fixed line. It’s superfluous and, indeed, irrelevant. I suppose with 4G offering only VoIP for voice calls mobile call charges will fall even further.

    It’s a real problem for telcos whose basic infrastructure is built around fixed line telephony. Moreover, the infrastructure has been built on the basis of universal service obligations with cross-subsidy from more profitable voice traffic to rural areas. That’s unsustainable as profitable traffic declines. The only option they’ve got to stave off bankruptcy is to get broadband to offset the voice decline. I’m not convinced that many can do that in the long term and even if they can there is no universal service obligation for broadband so they will be forced by economics to close down rural operations or have them be directly subsidised by the taxpayer.

    We are already seeing the prospect of Telecom Italia’s core Italian fixed network being spun off to be run as a not for profit venture because TI can’t afford to upgrade it and invest in 4G at the same time.

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