Fixed line alive (and kicking)

Fixed-line home phone services may well be declining in many developed economies such as Australia, but the take up in mobile services seems to be more than making up for it. That's OK if you are a multi-play CSP, but bad news if you are a plain old telephony provider.

A recent survey by the Australian Communications and Media Authority (ACMA) confirms that decline and is what we all probably expected with the surge in popularity of smartphones and the need to be connected everywhere, anytime. However, some of the findings are quite surprising and certainly provide a portent of what we can expect in the future.

It seems that young people are shunning home phones and, unless they are still living at home with Mum and Dad who pay the bills, probably never use one or even see the need to have one. The survey revealed that just 16 percent of 18-24 year olds who live alone have a fixed-line phone at all. They are the next generation now entering the work force, and bringing their communications habits with them. Sounds bad for fixed line phones in the future? Maybe not.

Whilst we all seem preoccupied with the load data being placing on our mobile networks, it may be surprising to note that in Australia, and pre-NBN rollout, fixed-line networks continue to do the heavy lifting of the digital economy, carrying an estimated 93 percent of total data downloaded via the Internet.

Bundling is surprising popular as well, but the ACMA survey found it was free services, such as free local calls, that was seen as the main benefit of bundling for 53 percent of households, while 48 percent identified the convenience of dealing with a single service provider for billing purposes.

It's interesting to see what industry associations, like TM Forum, and suppliers are suggesting to CSPs to prepare them for the future. Amdocs suggests that there should be a move away from product bundling to data bundling because consumers want plans that can be shared between devices, so if they buy a data bundle and have a tablet, smartphone and dongle they can share that data among all of their devices.

Family data plans are provided as an example where kids racing up large data traffic would be balanced, perhaps, by their parents' more frugal usage. Maybe even allowing the account holder, in this case the parents, to allocate tranches to each member of the family. Hmmm, not sure how that would work but it could be used as method for enforcing discipline, perhaps?

Now that capped plans are largely replacing those unlimited all-you-can-eat consumer favorites, CSPs are getting smarter about capping by providing visibility on data speeds and offering premium data customers priority on the network, ensuring they don’t experience lag time even if there is network congestion. Customers may be willing to pay a premium for this type of benefit, but net neutrality pundits may think otherwise.

Research firm, IDC, believes that having tried to block and retard the penetration of OTT players, mobile service providers are now facing a conundrum – cripple or kill the very applications that make smartphones so compelling to consumer and business users, or adapt their business models to leverage OTT activities.

We are even starting to see the beginnings of content provider pays models for customer data usage, e.g. Amazon's Kindle devices connect users to Amazon direct, but the network provider is all but anonymous. CSPs may be hoping that partnerships with content providers will help subsidize the cost of mounting data traffic provision.

If the ACMA report is indicative of worldwide trends, and fixed-line networks really are carrying the bulk of Internet traffic, then it seems only fitting that mobile networks step up their efforts, not just to introduce faster and higher capacity LTE networks, but to unload as much as possible onto the fixed-line networks. Femtocells and Wi-Fi hotspots sound like a good option. Probably explains why so many hotspots, sponsored by mobile operators, are now popping up all over the place. The new backhaul? Makes sense, doesn’t it?