Wireless won't back down: Subscriber usage up, data keeps it on upswing

Wireless device usage is on the rise, increasing about 110% from last year, according to a recent survey by the Cellular Telecommunications Industry Association. And its growth is not stopping any time soon, which bucks the trend of technologies that gain tremendous momentum early but eventually plateau.

What's more, wireless usage is expected to continue to surge, with a push from data services in the next few years. There even has been speculation that wireless devices may displace their landline counterparts. While this might be true for certain types of users, it is far from a ubiquitous reality. But the increasing number of services wireless carriers can offer consumers has kept the incumbents on guard.

"Consolidation in this industry is going to continue to occur, and this is certainly [a result] of the services people are demanding," said Mark Milazzo, director of marketing for Cisco Systems' technology and mobile group. As evidenced by unions such as MCI WorldCom/UUNet and Sprint PCS, wireless usage is rising because of Web capabilities, Milazzo said.

"A lot of things consumers will do with data will result in a phone call, ultimately increasing voice minutes," said Adam Zawel, an analyst with The Yankee Group. "Data services will increase voice minutes." For instance, a user might jump onto the Web via wireless device to find information on a restaurant and then call to make a reservation.

CTIA estimates that wireless subscribers used their devices for local calls an average of 180 minutes each month in 1999, up from 130 minutes from the previous year. The Yankee Group estimates that wireless minutes of use actually will rise to 400 minutes per month by 2004, Zawel said. In its November Wireless/Mobile Communications Report, The Yankee Group determined that wireless will be a greater threat to wireline in provisioning second and third lines to households because the wireline phone will be used for Internet access and as a backup phone. The report also suggested that wireline displacement will increase as wireless prices continue to fall and carriers offer more flexible plans (see figure).

Although AT&T Wireless uses wireline displacement as the cornerstone of its national advertising campaign, a spokesman for the operator said that wireline will be around for some time.

"There is a long way to go until people pull out their wireline phone for wireless," the spokesman said. Some examples of users who might swap wireline for wireless include young urban professionals or college students, he said.

Because carriers cannot inquire about consumers' motive for purchasing wireless phones, it is difficult to quantify the number of consumers using their phones occasionally or instead of their home phones. However, it's clear that wireless and wireline will share space in consumers' lives for a while.

"Right now the CTIA numbers lead us to believe that the explosion will continue," said Larry Swasey, senior analyst with Allied Business Intelligence. The firm predicts that the number of subscribers using digital service will rise to between 99 and 100 million next year, from 38.5 million this year.