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Access Line Losses Hurt: Verizon CEO

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Over the past few years, I have been saying that for telecom companies, losing access lines while trying to grow the number of subscribers to their triple-play services was like walking a tightrope wearing skates. Of course, none of the telecom executives would admit that losing millions of access lines every quarter was a problem. Until this week, when Verizon CEO Ivan Seidenberg towards the end of his conference call with Wall Street analysts acknowledged the problems caused by customers giving up their landlines.

The unspoken thing on this call is this whole issue of access line loss, and just very quickly what I’d like to say on that is that we’re not surprised at the access line loss…The issue for us is, that this issue of wireline margins and access line losses, trying to balance this issue on the head of a pin has been difficult.

If that is indeed the case, then why was it so hard to find the total line losses for the quarter in the company’s news release and accompanying documents? Check out the third-quarter line losses for all three Bell companies:

  • Qwest’s access lines totaled 11.9 million – a decline of 8.9 percent from the third quarter of 2007.
  • Verizon lost 1.012 million lines vs. 933,000 in the same quarter a year earlier.
  • AT&T lost almost 1 million primary lines.
  • Telcos are once again underestimating the speed with which folks are jettisoning their landlines — and will continue to do so, especially as the current downturn deepens. According to a new study from comScore, folks are foregoing broadband connections in favor of the iPhone, yet another bad omen for the wireline business. The study claims that households that make between $25,000 and $49,999 a year were the fastest-growing segment of iPhone purchasers for the June through August time period.

    “These data indicate that lower-income mobile subscribers are increasingly turning to their mobile devices to access the Internet, e-mail and their music collections,” said Mark Donovan, senior analyst at comScore in a statement. If folks drop their broadband and landline connections for an iPhone or other smartphone, then AT&T and Verizon can at least tap their wireless data revenue, but carriers without a wireless business are going to feel the squeeze.

    18 Responses to “Access Line Losses Hurt: Verizon CEO”

    1. WiMax will get rid of the need for broadband wires and provide much faster speeds. This is only a matter of time and i cant wait. I’d like to be able to use my desktop, laptop, and nintendo wii and not notice serious lag when one or the other is running and possibly get ride of all my extra wiring.

    2. @Ian,

      I agree in part with your statement, however I must point out that the cable companies are investing heavily in wireless. This is no coincidence as they too see the aforementioned sea change taking place. Of note, Comcast and Time Warner Cable invested in Xohm (wimax), and Cox Cable bought wireless spectrum in the FCC auction earlier this year. Additionally, the current surge in HDTV cable is due to federal mandate, not pure market demand.

      The unwiring of homes is indeed taking place.

    3. This is not a trend of “unwiring homes”. In fact, with broadband continuing to grow and more subscribers signing up for HDTV cable, homes are getting more wired than ever before.

      This is about voice communications and the long, protracted decline of the PSTN. Having a phone that’s tied to a fixed location, with limited capabilities is less desireable to people where each member of the household has their own handset that goes with them and does other things.

      That decline may well level off over time but is continuing to accelerate, so Om is not obsessing unjustifiably.

    4. @Om,

      You’ve pointed out what I refer to as the “disappearing elephant in the room”, which is the unwiring of homes has created a massive opportunity for new businesses and new business models. Digital delivery/management of tv, video, music, and photos present tremendous new options for existing businesses and entrepreneurs who get ahead of this sea change. With Wimax, burgeoning femtocells, and wireless base stations consumers will choose devices and services which provide convenience in the home AND while mobile.

      This change will accelerate over the next 12 months.