Younger users behind cellular phone growth

Kevin Rademacher

Friday, Oct. 24, 2003 | 11:08 a.m.

On Dec. 28, 2000, Sprint Corp. celebrated 1 million telephone lines in the Las Vegas Valley.

Today, Sprint -- the city's dominant local telephone service provider -- reports 900,000 lines. The decline is blamed on a number of factors, including the use of broadband service instead of second phone lines for home and business Internet access as well as increasing competition from rival service providers.

Growing competition also comes from the wireless communications industry as an increasing number of customers abandon traditional line-based telephone service completely for wireless phones.

Shoring up that argument are some strong statistics. Between 2000 and 2002, while landlines were on the decline, Nevada saw the number of wireless subscribers jump from 750,000 to 983,000, said a report compiled by the Federal Communications Commission's Wireline Competition Bureau.

Nationally, the numbers are similar. U.S. landlines fell from 193 million in 2000 to 188 million in 2002. During the same period, wireless subscriptions jumped from 91 million to 136 million, the Wireline Competition Bureau report said.

The success of wireless against its tethered competitors was a popular topic among attendees at this week's Cellular Telecommunications & Internet Association (CTIA) convention in Las Vegas.

Travis Larson, a CTIA spokesman, smiled broadly as he cited a recent J.D. Power and Associates study that said 5 percent of all wireless users -- about 7 million customers nationwide -- have abandoned land lines completely.

"These people have experienced the paradigm shift," he said. "A (phone) number is not what you call to anymore. It's who you call. You don't call home. You call someone, wherever they are."

A major part of the wireless industry still focuses on the business person, pitching phones that can send and receive e-mail and photos with increasing efficiency. But major market share, wireless service providers and handset manufacturers agreed, is being gained through a youth movement, pitching music and video game capabilities to 19- to 30-year-old customers.

"There's a generation of people now that have never known not having a cell phone," said Jeremy Pemble, a spokesman for AT&T Wireless.

Larson said it is still rare for a consumer to abandon land line service, even if it is kept only to connect a home security system, provide Internet access or backup phone service.

However, as that group of young consumers heads out on their own -- whether in dorm rooms, apartments or their first homes -- more of them are not having their land lines connected. Industry executives say those numbers are still small, but they said it could indicate a key shift in the dynamics of a market that has always been unpredictable.

"The industry at this moment is 20 years old," said Jeffrey Nelson, a Verizon Wireless spokesman. "Back then, the projections were that there would be one million to 1.5 million potential customers. We are at, now, 140 million to 150 million customers. ... Is there room more more growth? I think so."

Those phone makers said that growing market share would not have happened without competitive pricing from service providers.

"The big key was to get compelling (pricing) plans that mirrored and competed with pricing plans for home phone service," said John Chier, a spokesman for phone maker Kyocera Wireless Corp.

Nicky Csellak-Claeys, a spokeswoman for Sony Ericsson Mobile Communications Inc., agreed.

"They feed off each other, but you needed to have a critical mass for the (applications) to really take off," she said. "If there is an interesting application, people will be tempted to sign up, but it also takes good plans from the carriers."

Pemble added that the applications available will continue to advance as the networks make the transmission of increasingly large amounts of information possible.

"The networks are much more sophisticated now," he said, adding that the transmission of pictures and even text messaging would have been impossible a few years ago. Now, he added, video conferencing via mobile phone is not too far away.

As those applications continue to expand, more people will be drawn into the wireless industry and away from their landlines, Pemble said. Eventually, he said, wireless will likely take over as the dominant phone service.

"I think at some point in time we will cross that threshold," Pemble said.