Is there a future for fixed-line telephony?


By 2010, it is expected that more call minutes will originate from mobile phones than from fixed-line connections. Given that mobile phones started to appear in the 1980s - when they were sold by BT’s Cellnet and a very modest offshoot of Racal, called Vodafone - their progress has been remarkable.

Remember, too, that initially mobile phones more closely resembled bricks than the sleek miniature models that are sold worldwide today. Such a quick-moving trend is unusual for utilities. After all, technology in the water sector has barely changed since the 1970s. It also raises the question as to whether there is a future for fixed-line telephony, given that many people - especially the young - far prefer the instant accessibility of mobile telephony.

For BT, the shrinking of the number of the UK’s fixed telephone lines – down from 34.9 million in 2003 to 33.2 million in 2008 - has been compounded by the reduced number of minutes that the average user spends on fixed-line phones. To be sure, BT is investing heavily in rolling out broadband lines in the conviction that it will gain materially from convergence in the communications sector. Equally, with a weak share price – albeit somewhat higher than its low point earlier this year - £10 billion of net debt and a burgeoning pension deficit, BT is not exactly perfectly positioned. And, unlike Deutsche Telekom, France Telecom and, Telefonica, which now owns O2, BT has no serious mobile revenues to generate revenue growth.

Moreover, the march of mobile telephony may claim another unlikely victim. A recent opinion poll suggests that over half of those owning a mobile phone use it as an alarm clock. Perhaps the humble alarm clock will become as dated as the slide rule.

But, even more importantly, is there a future for fixed-line telephony?