Wireless-only households to double in three years

Canadian consumers will increasingly cut the cord over the next three years as price competition in the wireless sector heats up after the new wireless entrants launch services, according to a report from Convergence Consulting Group Ltd. Released earlier this month, The Battle for the North American (Canada & US) Couch Potato: Bundling, Television Internet, Telephone, Wireless, says wireless-only households will more than double from the 6% level at the end of 2008 to 13.5% by the end of 2011. The wireless-only household has long been talked about, but the impact here in Canada has been minimal, largely due to high wireless prices. Brahm Eiley, president of Convergence Consulting, says more consumers will abandon their landlines as wireless prices drop due to aggressive competition from the big carriers’ flanker brands and the launch of services by the new entrants. “Prices have already started to come down with the discounts brands and they’re going to come down further once the new entrants really come into the market,” he tells Report on Wireless. “And if you look at what happened south of the border where there is 20% wireless substitution, given how price competitive the wireless prices are, it makes complete sense that some people will choose to give up their wireline phone given that it’s just duplication at the end of the day.” But, Eiley says, we shouldn’t expect to see big increases in wireless substitution until next year. “The big wireless companies have already come out with these discounts brands and they’ve started to undercut. Imaging when the new cable companies and the other new entrants really enter the market,” he says. “That’s why we’re saying we’re going to see an acceleration of wireless-only households, but that’s really only going to take flight starting next year sometime.” To get a sense of where Canada might be headed with wireless substitution, Eiley points to the trend in the US. Wireless-only households already top 20% and this level is expected to rise to 27.5% by the end of 2011. “Once these guys (the new entrants) come in, the pick up on wireless substitution will increase and if the United States is at 20% now, and we’re only at 6%, you can kind of do the math,” he says. Convergence Consulting will be a releasing a report this fall, forecasting wireless substitution out to 2015. Wireless-only to have major impact on telco line losses The Convergence Consulting Couch Potato report also notes that wireless substitution is going to increasingly play a much larger role in contributing to local line losses for the telcos. “Currently just 20% of the telcos residential wireline telephone loss is due to wireless substitution, we forecast that will climb to 45% in 2011,” reads the report. Telco line losses will increase slightly in 2009 to 7.5% from 7% in 2008, but will jump an additional 2% to 9% in both 2010 and 2011, according to the Couch Potato report. The arrival of the new wireless entrants is going to have a noticeable impact on local line losses for the telcos, says Eiley, as will the cable companies. “So between the cable guys continuing to do well, and wireless substitution, we think that the telcos are going to see increased wireline residential telephone line loss starting in 2010,” he says.

Wireless-only households to double in three years

News | April 22, 2009

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