Wireline? Who Needs It?

It's started. Minutes of wireless use are replacing minutes of wireline use.

Sue Swenson, Leap Wireless (www.leapwireless.com) president & COO, cited a Yankee Group report (www.yankeegroup.com) that said in 2000, 10% of all MoU were wireless minutes, up from 6% the previous year. Wireless minutes are projected at 15% this year and will rise to 40% in 2005.

What's the attraction? For customers of Leap's Cricket service, it's the emphasis on comfortable wireless (www.cricketcommunications.com). Customers pay a flat rate for all-you-can-talk local service.

“More than price, customers like the predictability,” Swenson told the “Ripping the Cord” audience at Wireless 2001. Cricket customers can choose from two handsets. If they want long-distance calling, they pay in advance.

Cricket customers average about 1,000 MoU a month.

“That's comparable to landline, which is 800 to 1,000 minutes per month,” Swenson said.

The flat-rate pricing makes the concept of calling-party pays irrelevant, she said. There are no peak use times; the phones are used throughout the day. Leap emphasizes good in-building coverage, which may be one reason the at-home usage is about 2½ times that of traditional wireless.

In Nashville, almost half of its customers are using Cricket to replace the wireline phone, Swenson said.

“This is true competition to the local loop,” she said.

AT&T Wireless' Digital One Rate plan also made a big difference when it came to replacing landline minutes, according to William Mounger, Telecorp PCS chairman of the board (www.suncom1.com). Telecorp is an AT&T affiliate (www.attws.com) but is an independent company.

Mounger said his company actually is selling time management.

“Voice is still the killer app, and that's where our business is focused,” he said.

Telecorp held customer focus groups to determine the pros and cons of wireless usage.

Customers liked having one number; mobility; features such as caller ID, voice mail, SMS; always being in touch; and unlimited use. The drawbacks included no multiple extensions; reliability; no speakerphone; battery charging; and the fact that it is easy to lose the phone.

Telecorp serves customers in Puerto Rico, one place where wireless is rapidly displacing wireline, Mounger said. There, peak use is around 9 p.m. when people are calling inter-island, which is cheaper with wireless, or family-to-family. Landline tends to be used for high-speed data in the home, he said.

Western Wireless is not just seeing wireless replace wireline, but it is using wireless to provide service where it never has been provided before, said Mikal Thomsen, president & COO (www.westernwireless.com).

His company, 15^th in terms of POPs, is the most rural major wireless carrier in the country, covering a number of square miles second only to Verizon Wireless (www.verizonwireless.com).

When Western Wireless first started out, it wasn't replacing minutes, Thomsen said. But thanks to the big-bucket plans, people have started using wireless in their homes and offices, where they also have access to wireline. In the last 18 months, Western Wireless' average MoU has doubled to 250 per subscriber per month.

Western Wireless is serving a number of Indian reservations, places where the wireline coverage has been abysmal, Thomsen said.

On election day, service began at the Pine Ridge Reservation. Within a month, 1,000 customers had signed up, 60% of whom had never had telephone service before.

“The big opportunity for Western Wireless and others is to provide the services that wireline carriers are not providing,” Thomsen said. “That means data and high-speed data.”

On Pine Ridge, the customers are attracted to wireless Internet service.

“It's only 9.6kb/s, but it's better than the 0kb/s they were used to receiving,” Thomsen said. “In most towns that we serve, 19.6kb/s is high-speed data. In the next year and a half, we will provide 50kb/s-to-100kb/s speeds and blow the landlines out of the water.”