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The Honolulu Advertiser
Posted on: Tuesday, October 21, 2003

Wireless phones could top wired by year's end

By Jon Van
Chicago Tribune

Spending for wireless phone service is poised to overtake spending on traditional phone calls for the first time by the end of the year, according to a survey to be released today.

Household spending for wireless phone service grew 9 percent while spending for traditional phones dropped 4 percent, according to data from TNS Telecoms, which tracks consumer telecom bills.

As of midyear, the average household spent $48.28 a month on wired phone service and $44.63 on wireless. If the trend continues, wireless spending will surpass traditional phone spending by the end of the year, said Charles White, TNS Telecoms vice president.

"If you just look at local phone service, wireless is already beating wireline," said White. "When you combine local and long distance, wireline spending is still ahead, but it's falling and wireless is rising."

While the phone industry has slumped for the past two years, wireless has provided the sector's strongest growth. Today, there is at least one wireless phone in two-thirds of U.S. households.

Phone giants like SBC Communications Inc. and Verizon Communications Inc. have seen overall revenues decline because of the shift, and both companies would be in far worse shape if it weren't for their wireless phone operations.

But with six national companies offering wireless service, no single company can corner telecom revenues to the extent that was common in the traditional wired world.

Besides the spending decline for phone service, the survey also found a significant market share loss for the two traditional leaders in residential long-distance service. AT&T Corp. saw its market share decline by 8 percent and MCI's market share dropped a stout 25 percent.

Meanwhile, Verizon and SBC are gaining long-distance market share.

AT&T's share of the household long-distance market now is only 31 percent, while MCI has 11 percent. Verizon has 10 percent, ahead of Sprint Corp. with 8 percent and SBC's 7 percent.

Also, the survey found that only 4 percent of households have opted for the flat-rate wired phone service that typically charges about $50 a month for unlimited local and long distance calling. That market is dominated by MCI, which launched the package last year, with 46 percent of the market. Verizon is second with 27 percent.

"MCI really pushed the local/long distance bundle," White said. "It's the only bundled package MCI sells. The other carriers offer that bundle now, too, but they also offer a lot of other packages. So MCI continues to dominate that small market segment."

TNS Telecoms, based in Jenkintown, Pa., produces its survey by examining complete telecom bills from 32,000 U.S. households.