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Tendencies: mobile slowly replacing fixed-line in the UK
Posted on 24-Aug-2004 23:13. | Tags Filed under: News.

Tendencies: mobile slowly replacing fixed-line in the UK
The volume of fixed-line voice traffic has been decreasing for the past couple of years as usage of mobile minutes continues to gather pace. The cost savings gained from discarding fixed lines, combined with declining mobile price premiums, are driving further fixed-mobile substitution in the voice market. The information is part of the findings published on "Frost & Sullivan's Analysis Of Voice Markets And Fixed-to-Mobile Substitution In The United Kingdom" by research firm Frost & Sullivan.

According to the report, by 2007 49 per cent of revenues are expected to come from the mobile network - an increase from 38 per cent in 2000. The total value of substituted minutes is estimated to increase from GBP0.9 billion in 2003 to GBP1.36 billion in 2007.

Pricing is becoming more complex as mobile service providers move from per minute billing toward bundled minutes and location-based billing. They are also hoping that the shift from prepay to contract packages will materialise to allow them to lock in value and strengthen customer relationships. Though both options are popular, new subscribers are likely to favour prepay packages.

For now, declining prices - combined with the increasing fixed-line rentals - are driving the mobile-only option. With fixed-line rentals reaching almost 60 per cent of the total bill value, customers tend to prefer mobile voice services.

Apart from pricing issues, fixed-line operators are finding it increasingly challenging to combat the improved coverage and capacity of mobile services and the enhanced functionality of personalised and easy-to-handle handsets. In addition, the roll-out of 3G networks is also spurring the fixed-mobile substitution.

The overall scene in the voice market, therefore, favours the mutual co-existence of both fixed and mobile services. Moreover, the increasing proliferation of complementary voice over IP and non-voice communications such as E-mail, instant messaging and video telephony initiate the integration of mobile capabilities such as push-to-talk and ring tones into fixed lines.

"Rather than competing and eating into each others shares, a synergy between fixed and mobile markets seems to offer a perfect fit," notes Mr. ten Sythoff. "There is a lot of opportunity for video calls on fixed lines, as well as the convergence of other services such as sending an SMS from mobile to a fixed line and vice versa."

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