Revenues from mobile phones in Europe will soon overtake those of the total fixed line market but this does not spell the end of the road for landlines, according to the Yankee Group.
In a recent report,
Fixed-to-Mobile Substitution Is Inevitable In Europe But Don’t Rush It, analysts claimed that between 20 and 40% of voice traffic originates on mobile networks. It is now just a matter of time before wireless revenues surpass fixed line turnover.
Nonetheless, the rapid growth in mobile penetration will not lead to total displacement of fixed lines, at least not in the short term.
“Bundling and targeted substitution packages have made mobile rates more competitive to the extent that price inelasticity exists,” said Farid Yunus, Yankee Group Wireless/Mobile Europe senior analyst. “In more mature markets, there is no longer a specific price inflection point at which mobile phones displace fixed. Consumer surveys support this, with fixed lines remaining firmly entrenched in most households.”
The Yankee Group calculates that the number of mobile phone subscribers will grow by almost 9% between 2002 and 2007, taking the total to more than 1.75 billion. Nonetheless, a level playing field is a distant dream at present.
“Mobile cannot compete with fixed on price or performance, especially for data. However, the crux of mobility is convenience – access anytime, anywhere, which deserves a premium price. Aggressively targeting fixed traffic would be a step toward voice commoditization,” said Yamus.
The Yankee Group recommends that mobile operators focus on revenue optimisation rather than landline displacement. This can be achieved by launching more data content services while maintaining average revenue per voice minute.
Attempts need to be made to change the perception that wireless services are not as reliable or good value for money as their fixed line equivalent. The report also suggests that operators create more dependence on mobile phones at home and in the workplace by introducing new personalisation tools and tariff packages.
