Hard-wired phones may increasingly become a victim of the tightening U.S. economy as consumers look for new ways to cut spending.
A new Nielsen Mobile study indicates that one in five U.S. wireless households could be wireless-only by the end of 2008. Already 20 million households, or 17%, are abandoning land-line phones in favor of mobile ones. That's up from only 8.5% in 2005.
With landline connections costing $40 monthly on average, Nielsen surmises the downturn is likely to turn more consumers into "cord-cutters."
"As wireless network quality improves and unlimited calling becomes increasingly pervasive, we expect the trend toward wireless substitution to continue," said Alison LeBreton, vice president of client services for Nielsen Mobile, in a statement. "In a tightening economy every dollar counts, and consumers are more and more comfortable with the idea of ditching their landline connection."
Underlying that assumption is that the majority of cord-cutters are at the lower end of the economic scale. Nearly 60% have household incomes of $40,000 or less, and 55% are renters rather than homeowners. They also skew younger, with 64% in the 18- to-34-year-old age range.
Not surprisingly, wireless-only adopters use their mobile phones 45% more than wireline subscribers. But they still save an average of $33 a month.
Among the biggest benefactors of the wireless-only migration have been regional service providers such as Cricket and Metro PCS, which began offering fixed-price, unlimited calling plans well before the major carriers joined that trend this year.
But the spread of all-you-can-eat plans will only further encourage people to give up their land lines. Among four the major U.S. carriers, Sprint and T-Mobile are more likely to count cord-cutters among their customers.
Nielsen points out, however, that opting out of traditional phone service doesn't always work out. The study found that 10% of land-line phone users said they were previous cord-cutters who had reconnected. These "cord-menders" came back because they needed the land line for another service, bundled it with other services, or because it was too costly or unsatisfactory to go mobile-only.
Beyond phone lines, what's the next cord to be cut? Nielsen found that wireless-only users are less likely to have satellite TV than average households (16% to 27%) and more likely to have broadcast TV (15% to 12%). They also represent the same demographic that reports watching TV on their PCs.
"Some wireless substitutors may, therefore, also forego the costs of cable or satellite TV by plugging their PC directly into a television to stream video, although the vast majority of all households continue to subscribe to some form of television service," the report concluded.