Cutting the cord: Home phone lines giving way to cellular revolution

Will Oremus

Monday, July 28, 2003 | 11:11 a.m.

For decades the land-line home telephone has ranked with the refrigerator and the living-room couch as a necessity of residential life. But new statistics show that a wireless revolution is under way that could change that.

An estimated 12 percent of young adults nationwide have "cut the cord," hanging up their home phones in favor of mobile devices, according to a just-completed study by the Boston-based communications research firm Yankee Group, which surveyed 1,000 cell phone users between the ages of 18 and 24.

A separate survey of 2,500 households found that the percentage of cord-cutting residences in the general population is about 4 percent.

"The reason they're doing it is because they feel that it is no longer essential to have a land line," Yankee Group analyst Keith Mallinson said. "The mobile phone can do anything the land line can do, plus it has the benefit of being able to go with you anywhere so you can always be reached."

Omar Rehiem, 32, who works at the T-Mobile store in the Galleria at Sunset mall, cut the cord three years ago and says he hasn't missed his home phone for a minute.

"I've got all these phone jacks in my house," he said. "I look at them and just laugh."

For many highly mobile people like Rehiem, the cell phone has become indispensable. So rather than pay two bills every month, they decide to ditch their home phone service.

"I just got to the point where it made no sense keeping it," Rehiem said. "At the time I was breaking even, but now with the new rate plans, (my cell phone) saves me a lot of money."

A typical entry-level cell phone plan charges customers about $35 a month for 400 minutes of weekday service plus unlimited talk time on nights and weekends. What saves money for Rehiem and many of his customers is the fact that long-distance calls carry no extra charge.

"With everybody's family being located somewhere else, it's all this long distance going on, and (cell phone users) are actually not paying long distance any longer."

That makes cell phones an especially attractive option for the many Southern Nevadans who moved to the area from out of state. In fact, cell phone use in Las Vegas is among the heaviest in the nation, according to Sprint PCS spokeswoman Vicki Soares.

"We never close," Soares said. "There's always that constant 24-hour need to communicate."

The cord-cutters are only part of that story. A Federal Communications Commission report released last week shows that between 50 percent and 60 percent of residents in the Southern Nevada region own cell phones. And according to an April Yankee Group study, those wireless customers use their cell phones slightly more, on average, than their home phones.

"Mobile phones are no longer minor pursuits -- they're a major activity that's stealing the lunch of the land lines," Mallinson said.

The FCC's report cited a February congressional hearing in which Robert Crandall of the Brookings Institution said that wireless had "siphoned enormous amounts of traffic from the wire-line network." Analysts Cannon Carr and Gregor Dannacher pegged the displacement at 30 percent of all wire-line minutes.

It's not just the cord-cutters who are doing the damage.

Dean Larsen of Green Valley still subscribes to basic local land-line service, so he has not officially joined the ranks of the cord-cutters. Rather, he is one of a growing number who rely primarily on their cell phones and use their home phones only in limited circumstances, eschewing add-on features and avoiding long-distance bills.

Larsen, who subscribes to a high-end cellular service that gives him 2,500 minutes of air time each month, said he has thought many times about ditching his home phone.

"I would, if I didn't need it for faxes and incoming business calls," he said.

He prefers his cell phone because of its convenience -- he carries it everywhere -- and its free long-distance service. Besides using it as his main business line, Larsen routinely uses his cell phone to talk to his children in Arizona and the Midwest.

Mallinson said that judging the impact of cell phone use on the home phone sector only by the number of cord-cutters "is a pretty harsh test, because people may have a wire-line that just isn't used a lot." He predicted that wireless users would probably not begin cutting the cord en masse until new technology allows home phone numbers to be transferred to cell phones.

But the current absence of wireless number portability, as the technology is called, is not the only factor in people's decision to retain home phone service.

Residents of gated communities need wire-line service to buzz people in. Dial-up modem users need it to connect to the Internet.

Leon Wright, sales associate for the Galleria's Cingular Wireless store, said many of his customers use their home phones strategically to take advantage of their unlimited local usage plans.

"When you've got to pay your bills and sit there on hold, you've got to use your house phone for that," he said.

Kevin McDaniel, Wright's co-worker at the Cingular store, has an even more compelling reason to hold on to his home phone: his cell phone doesn't work in his home.

McDaniel lives on Sunset Road between Mountain Vista Street and Russell Road, a place he calls "a dead spot on the network."

"I use my cell phone everywhere but home," he said.

That was the original idea behind the mobile phone. It was conceived as an alternative to the pay phone, not the home phone.

But while the dead spots that are scattered across every provider's network vex many customers, Larsen said he accepts them as a fact of wireless life.

"It's the 21st century," he said. "I just tell people, 'Hold on a minute until I can get better reception.' "

Rehiem noted that Larsen's attitude is also typical of students and other young people wanting to save money.

"A lot of college kids decide they can't afford the land lines," Rehiem said.

Wright, 21, agreed that cord-cutting is especially prevalent among the under-30 crowd.

"The younger generation, they're always out and about," he said. "All (a land line) is is an extra bill."

But Wright's view that "I wouldn't have any use for a home phone anyway, because I'm hardly ever home" is not limited to teens and twentysomethings.

Anita Sausedo, 38, who works for the Molly Maid cleaning service, said she and her husband don't have a home phone because they're "not home a lot."

"Seems like we're always just here to sleep and eat," she said. And who wants to be disturbed while sleeping or eating?

"Phone solicitors, telemarketers, I didn't even want to be bothered with them at all," Sausedo said. "The good thing with (a cell phone): If you don't want to be bothered, you just turn it off or leave it at home."

Like Larsen and Rehiem, Sausedo believes that her cell phone saves her money on long-distance calls.

"My children, they live in Nebraska," she said. "When we lived in Reno and had a home phone, my long distance was probably about $300 or $400 a month."

Now it's included in her $49.99 per month cellular plan. Sausedo said the 500 anytime minutes and unlimited night and weekend minutes are sufficient to keep her from fretting about her talking time.

"I don't say, 'Oh jeez, there goes my minutes, there goes my minutes.' I don't miss the home phone at all."

At the moment, the people most worried about losing minutes may be those who provide land-line long-distance services.

The FCC noted in its report that long-distance giants AT&T, MCI and Sprint have all been losing significant revenues to wireless services.

At the local level, hotel-casinos have claimed that they are losing revenue as customers turn to cell phones rather than room phones for long-distance calls. Hard Rock Hotel Vice President Jim Bowen estimated that hotel guests' long-distance phone use is down 30 percent this year, a figure he said was attributable to the proliferation of cell phones.

Not that the companies whose business is affected by the cell phone boom are taking the beating lying down.

Cordless home phone leader Uniden has launched a public relations campaign trumpeting the greater reliability and clarity of land-line service. The company conducted a study and found that "despite the recent buzz about 'cutting the cord' ... people still value home phones as the most meaningful way to communicate with loved ones."

Sprint, which offers wireless as well as land-line phone service, is taking a different approach. Soares said that the company has recently unveiled trial packages linking cellular, long-distance and local service in an attempt to cover all the bases. But the practice, called bundling, may not be as feasible for other phone companies, since Sprint is the only one that is a major provider of all three services.

In the meantime, improvements to wireless networks are expected to further enhance cellular service, patching up holes in coverage and expanding mobile phones' Internet capabilities.

And that just might lure holdouts like McDaniel and Larsen to go ahead and cut the cord. But Mallinson said the home phone isn't in danger of becoming obsolete.

"I think that we're probably never going to see the overall share of cord- cutters rise above 20 percent," Mallinson said. "Even the young adults, I think a lot of them will migrate back to the land lines. Once they get back into family formation, there's a benefit of having a phone for a place rather than just an individual."

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