Wireless continues to batter landline services, survey says

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Landline telephone companies continue to lose ground to wireless service providers, and Canadian users take time to switch to cell phones compared to consumers in other countries, a Statistics Canada survey indicates.

StatsCan’s Residential Telephone Service Survey found there were 16.8 million wireless subscribers at the end of the first quarter, up by 11.9 per cent from the same period last year.

However, StatsCan said there were just 52 wireless users per 100 people in Canada for the same period. This level of adoption was reached by the United States as far back as 2003.

“The lag is even more evident when compared to member countries of Organization for Economic Co-operation and Development (OECD),” a press release from StatsCan said.

The OECD, a group of 30 countries that support the development of democratic markets and economy, had an average of 53.5 wireless subscribers for every 100 inhabitants.

The report was welcomed by the wireless telecom industry, a Canadian analyst said.

“This is great news for wireless service providers,” said Roberta Fox, principal of the telecommunications research firm Fox Group Inc. in Mount Albert, Ontario.

Fox said wireless adoption was slow in Canada because of its entrenched traditional wireline service. “Most of the fast adopters of cell phones are countries that do not have well established landline carriers.”

StatsCan said customers giving up traditional residential lines are turning to wireless or cable telephone service. Close to 615,000 households were using cellular service at the end of 2005, approximately 285,000 more than the previous year.

Along the same lines, a recent report by the Canadian Radio-Television and Telecommunications Commission (CRTC) indicated that competitors (excluding wireless services) of incumbent telephone companies had attracted 963,000 residential clients by the end of 2005, more than double the number of subscribers in 2004.

“The major portion of this leap of 545,000 customers (59 per cent) can be explained by the strong growth of telephone services offered by major cable companies,” said StatsCan.

StatsCan said revenues of wireline operators dropped by 3.8 per cent to $5.5 billion in the first quarter of 2006 compared to the same period in 2005. This was in contrast to the revenues in the wireless market that have been steadily increasing. For the first three months of the year wireless operators saw revenues shoot up by 17.2 per cent to $2.9 billion over the same period in 2005.

In terms of profits, the earnings before interest and taxes of wireline networks were $1.1 billion for the first quarter of 2006, down 10.1 per cent from 2005 while those of wireless operators rose 32.2 per cent to $854.2 million.

Fox said traditional telcos realized they were being battered by the competition and were seeking other revenue streams. “Telcos recognize that their foundation revenues are failing and this is driving them to seek other income sources.”

“Bell Canada and Telus have become leaders in offering hosted email and Webpage services. They have also been developing software applications such as anti-spam applications,” said Fox.

Fox noted that the turbulence in the industry has driven firms to seek new pastures. “Rogers Corp. has expanded from an entertainment company to a telecom firm and BCE is dipping its toes into entertainment while Telus is looking into HDTV.”

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