Verizon (VZ) and AT&T (T) are in a race to see whether the growth in their cellular and broadband businesses can accelerate faster than their residential landline businesses are shrinking. The fate of their earnings hangs in the balance.
The recent news about the prospects of holding onto landline customers has not been terribly good. According to the AP,”the number of U.S. households opting for only cell phones has for the first time surpassed those that just have traditional landlines.”
The figures are bound to get worse as cell phones add more features and 3G networks extend their reaches beyond major cities and into suburbs and smaller towns.
The landline still has some utility because it does not need electricity to work. In an emergency, that is a comfort. And, it is an advantage over VoIP and cellular service. But, that advantage is only important in areas of the country with weak electric infrastructure and the number of areas like that is extremely limited.
The day is coming when almost no one will have a residential landline. Verizon and AT&T need to hope that every one of the customers who drop the traditional service will have a telecom broadband connection and two or three extra cell phones on hand.
Douglas A. McIntyre