Monday, October 27, 2008

Verizon's performance starts to confirm the predictions

We have all seen it coming... the day when landlines actually become less prevalent than cell phones. In some developing countries, that day is already here, since the cell towers can be easier to deploy than hundreds of miles of wire stretched across an inhospitable countryside. However, in the US, the wire-based telephone is still the de facto standard for communication, as well as other consumer processes. 911 call handling depends on a land-based address for certain functions, as do cable TV and utility provision processes. When we call for a power outage, the automated phone system users the caller ID to determine the location of the service interruption. That doesn't work so well if I call from a friend's home across town using my cell phone. Even so, I know several people in around 30-ish years old who, when they moved out of mom & dad's place, simply did not see the need for a land-line.

Verizon recently announced their 3Q results, which finally start to provide some evidence for this theoretical trend. Their wireless division (a joint venture with Vodafone) saw a gross revenue increase of 13%, with a monthly per customer revenue increase of 0.9%. The land-line business, on the other hand, saw a decline in revenue of 1.7%.

In addition to some of the "infrastructure" processes discussed above, this trend has important implications for consumer marketing. Any phone systems that tie a caller ID to an address -- pizza delivery is an obvious example -- will have to be retooled to account for this. Response research that uses area code and prefix to identify a trading area will be less and less effective as people retain their phone number regardless of location.

And how will telephone companies respond to the fact that "long distance" is becoming a moot point? When a dad calls his daughter in college on her cell phone, he is calling a "local" number that happens to be physically located hundreds of miles away. What will businesses do with their wire-based phones? When a block of cell phones can be tied together as a virtual PBX, why will anyone by another legacy style phone system (switch-based or IP-based) ever again?

Just some questions I've been pondering...

No comments:

Post a Comment