Broadband is the driver behind the consumer behavior that is fragmenting and disrupting traditional media: that’s well established. Always-on connections cause people to use the Internet more often, for more things and for longer periods of time. Given this very clear consumer trend, the question is whether broadband is growing or slowing. Given the aggressive competition between cable companies and Telcos and the continuing rollout of municipal Wi-Fi, we can expect broadband to continue its push.
When you combine broadband and the growth of US cellphone subscribers what you see is a landline business that is starting to show real signs of strain. Om Malik has a breakdown of the loss of landline subscribers by Telco. He also has a post about the addition of new DSL and cable broadband subscribers. These former landline subscribers are either dropping their landlines entirely for wireless or they’re substituting VoIP.
The demystification of VoIP (by cable companies) and new hardware devices like this and this, which make it less “geeky,” mean that we can expect to see an acceleration of VoIP adoption in the coming 24 months. Again, from the recent Harris Interactive study on consumer awareness of VoIP:
Among those adults who do not use Internet telephony, more than half (56%) in Britain and about half (49%) in the United States say they are at least somewhat interested in it. Despite this interest, it’s worth noting that only small percentages (11% in Britain and 9% in the United States) say they are ‘very’ interested in the possibility of making telephone calls via an Internet connection, and one in four adults who do not currently use VoIP but are interested in it (26% in both Great Britain and the United States) say they will be likely to consider or buy VoIP in the next 12 months or sooner…
Verizon’s earnings reflect perfectly the dilemma and “schizophrenia” of communications companies that have both old and new telephony businesses. From the WSJ’s article (sub. req’d) on Verizon earnings:
Verizon Communications Inc. reported a drop in first-quarter earnings, as strong growth in wireless services was offset by costs linked to the acquisition of MCI Inc. and continued declines in its core landline business. Verizon said net income for the quarter was $1.63 billion, or 56 cents per share, down 7% from $1.76 billion during the same period last year, before the company’s acquisition of MCI.
Verizon Wireless, a joint venture of Verizon and Vodafone Group PLC of Britain, was Verizon’s growth engine during the quarter. The wireless operator added 1.7 million new customers, expanding its total subscriber base to 53 million, compared to 55.8 million customers for Cingular Wireless, a joint venture between Verizon rivals AT&T Inc. and BellSouth Corp.
Verizon’s core landline business saw first-quarter revenue jump to $12.5 billion, up more than a third from the first quarter last year, mainly due to the acquired MCI business, particularly in the business market. However, Verizon’s core landline business continued to perform poorly, with the company’s total telephone access lines declining 6.9% to 50 million, from the previous year.
Of course widespread VoIP penetration is not a foregone conclusion, but there is clearly growing momentum. My interest in VoIP is tied to the applications it potentially enables in terms of ad and online consumer products and new ways for consumers and merchants to connect — online and off.
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Related: Broadband over power lines (BPL) provider Current Communications is set to announce a whopping $130 in new funding. Current investors include Earthlink and Google. More on the announcement is available from the WSJ (sub. req’d).
