Blog Post

Ma Bell and Its Vanishing Phone Lines

Three years ago, the wireline revenues of U.S. phone companies were forecast to decline about 3.3 percent annually through 2009. Talk about underestimating those numbers — take a look at the following graph and you see that AT&T’s (s T) consumer line business is evaporating faster than raindrops in the Sahara.


Roughly a year later, I pointed out that the phone companies would always be in a race against time — the more lines they lost, the less chance they’d have to able to convert their customers to faster broadband.

That is indeed a problem that continues to haunt the incumbent carriers — across the board. Cable companies have done a good job of snatching voice customers. Many, like me, have switched entirely to wireless. The down economy has only exacerbated these issues.

Verizon (s VZ) has countered with a better broadband proposition in the form of fiber and a better wireless network. It’s also getting rid of its wireline business as quickly as it can, fetching as much cash as possible for a business that is going nowhere fast.

In comparison, AT&T’s problems are reflected in the fact that it now likes to present itself as a “wireless company.” That’s the same line Sprint (s S) used to use before it got rid of Embarq.

What I find more surprising is that AT&T is slowing down its U-verse rollout. From the looks of it, people actually like this product (mostly because they hate their cable companies) and want Ma Bell to offer this higher-speed broadband and IPTV package. Heck, even I would sign up for AT&T U-verse…if it were available in my neighborhood, that is.

11 Responses to “Ma Bell and Its Vanishing Phone Lines”

  1. philip reeves

    they want spend the money . the technicians know how to fix the problem but thier number crunches don’t want to provide true customer service. allowing true technicians to correct the problem would cost them their dignity knowing the technicians are right. power corrupts their commen sense.

  2. Doug Mohney

    Om, I can’t believe you’d want AT&T U-Verse after the flaming you gave the wireless side of the house.

    Do you think AT&T is going to do any better delivering broadband? Be careful what you wish for.

    And there’s also the not-so-little matter of bandwidth metering — something that Verizon has (so far) stayed away from.

  3. Here is my 2 cents..
    Landline is a must if one cares about the reliability of your security system. Also businesses talking over VOIP lines to their customers sometimes are not very professional sounding. Also carrying a microwave in the ear may not be always a good idea.

  4. Sure uverse is great as an alternative to your cable company, but what are they going to do in a couple years when vdsl can’t keep up with cable and fiber? At least Verizon is totally embracing the move away from wireline phone service. They offer bundle discounts with just fios Internet and tv and when bundled with wireless service.

  5. It’s not unique to just Ma Bell. We just recently did a study comparing rural to urban for both broadband and access lines. A trend to watch is, starting in 4Q08, line loss began to stabilize, but it’s too early to see if that trend will continue. Another trend to watch is the move by incumbents to IP Voice. Early indications from AT&T and SureWest suggest an IP Voice product is helping to slow landline voice decline.

  6. It feels like the phone companies and cable companies are now just both wire to the home companies competing with different services and speeds. ATT and Verizon have an advantage over Comcast and Time Warner in that they have wireless service offerings as well. Cable has done a great job of competing with fiber with Docsis 3.0 and running fiber to the head end though. If cable continues this push, the CapEx for fiber may not be worth it to Verizon/ATT in the short term. Another thing to consider is that Verizon has been cutting copper where they put in Fios and they are the LEC. That cuts the head off potential CLEC DSL providers b/c the FCC has no rule mandating they share access over fiber yet. That alone could be worth the cost of the plant for Fios. Since I think Uverse keeps the twisted pair in place for the most part and runs fiber to the hood, and are not the LEC where Uverse is being rolled out, they do not reap the competitive advantage that Verizon does.

  7. I have U-verse and love it! Picture is awesome, VOIP is clear (even has battery backup), internet is fast and reliable, customer service is always fast and courteous. The price is great especially when compared to Time Warner Cable packages in San Antonio, Texas. I hope you get it soon!

  8. Om – I agree with you on the U-verse thing. When I first heard about it I was psyched, Comcast can be hard to love and I was eager to churn. Part of this is from their habit of periodically disconnecting my data service for no reason. Another part would be the fairly frequent outages and downtime, but that seems to come in waves. Seems DOCSIS 3.0 represents another wave, oh, well, every rose has its thorns. Sadly no U-verse in Mountain View in my neighborhood at last check. Maybe soon.