Landline phones have been an integral part of American lifestyle for most part of the 20th century and their impending demise at the hands of cell phones in such a short period of time demonstrates the increasingly shorter life spans of technologies. A substitute for a product performs same or at least similar functions but cell phones are turning out to be more-than-perfect substitute for landline phones. Not only they perform all of the functions of landline phone and perform them better but cell phones also perform several other functions landline technology cannot incorporate due to its very nature. It is not surprising that landline technology may soon become a relic of the past because it has failed to keep up with the needs and demands of the times.
One of the major factors in the triumph of cell phones over landline phones is much better value of cell phones. There was a time when cell phone monthly costs were significantly higher than landline phone and customers would be forced to choose between convenience and cost. But advancements in hardware technology and intense competition among wireless service providers have eliminated any advantage landline phones might have held. The value proposition offered by cell phone manufacturers and wireless service providers now make choosing wireless technology over landline technology a no-brainer. First of all, cell phone users are not restricted by physical location restrictions unlike landline users. In addition to performing all functions that landline phones perform, advanced cell phones such as smart phones also increase personal and work productivity through computing capabilities. Landline phones have changed little over the last few decades while the progress in cell phone technology has been astonishing even in the short term. In short, wireless companies have won the competition by continually innovating while landline companies adopted a relaxed approach to their business.
Cell phones have also won the battle because wireless industry closely watched emerging trends and incorporated them into their products to lure customers. As portable music gadgets started gain popularity, cell phone manufacturers added the capability to play songs. When working professionals embraced personal digital assistant (PDA) to organize their work life, cell phone manufacturers responded with PDA-like capabilities in their products. All of these steps only helped cell phones extend their advantage over landline phones. Not surprisingly, cell phones have made deep inroads into landline phones territory in a short period of time. It is now believed that 91 percent of American adults have cell phones and 56 percent of American adults have smart phones . As technology writer Marin Perez notes, there has hardly been any innovation in the landline phone sector .
Cell phones with advanced capabilities, usually known as smart phones, have also played a decisive role in widespread adoption of wireless technology for both personal and professional use. Smart phones are arguably the most mobile form of computing. The quality of mobile wireless internet connections keep getting better and as a result, businesses have embraced smart phones as mini-computers. Working professionals are now able to work on the move which has made smart phones an indispensable accessory for them .
Smart phones like iPhone have almost unlimited capabilities, only limited by the number of apps available. They have improved our quality of lives in ways one could never have imagined even few years back. Apps exist to assist individual consumers with almost any problem or need they may have. For example, parents can keep track of their children round-the-clock . Individuals can perform many of the tasks without leaving home such as online banking, bill payment, and shopping. Social media has emerged as arguably the most revolutionary internet platform in the last few years and smart phones are fully equipped to help users live fulfill their social media needs. The countless uses of smart phone help lock-in users and the prices of smart phones have declined to such an extent that they have become a commodity even in emerging economies like India. India is already the world’s third largest market for smart phone and the market for smart phone grew at a faster pace in India than in any other country from second to third quarter last year .
Wireless technology has benefitted from the support of technology companies, too whose core business may not be phone communication but who nonetheless see tremendous commercial potential in wireless communication. One such company is Google which now makes it possible for customers to make free or cheap long-distance and international calls from the computers . Services like these eliminate any remaining incentive consumers may still have to remain loyal to landline technology.
Wireless companies won the battle also in part due to more effective marketing strategies than those of landline companies. Wireless industry has primarily targeted users that are more likely to replace models more often. In order to keep customers excited, cell phone manufacturers regularly introduce new models. On the other hand, landline core customers are baby boomers who may have stayed loyal to the technology out of habit and keep the same product for years. Thus, high sales turnover has also been highly instrumental in wireless industry’s win against the landline industry. The studies indeed confirm that loyalty to cell phone technology is higher among younger groups as opposed to landline technology which enjoys greater loyalty among older groups. U.S. Census Bureau found in 2009 that cell phone popularity was particularly high in households 29 years or younger while landline technology was particularly popular among 65 years or older households .
But it is a mistake to assume that the wireless sector has won the battle against landline sector fair and square. Wireless companies have not shown any hesitation to use their financial resources to lobby for more favorable regulations. One of the wireless giants, Verizon spent enormous resources on lobbyists to help pass state regulations in Florida, Virginia, and Texas that eliminated the company’s obligation to provide landline service to anyone who requests it . Wireless companies also joined hands to back up a tax regulation in Washington State that would have increased sales tax on landline services. The regulation has a fair chance of being passed and may further hurt the economics of landline phone service.
Wireless companies have also utilized deceptive business practices to turn customers away from landline services. These tactics such as charging for nonexistent calls, signing up customers for services without authorization, and adding hidden charges have all been aimed at reducing landline service subscribers. The wireless giants have also significantly increased prices for landline services in some markets to decrease their economic appeal. Within less than a year of the deregulation in the state of Kentucky, Cincinnati Bell increase monthly price for landline service by about 17 percent while AT&T increased the price of cheapest landline plan by 20 percent . AT&T played a similar tactic in Tennessee as well where it added Tennessee Regulatory Inspection Fee to landline subscriber’s monthly bills . The idea is to frustrate landline subscribers in order to force them to drop their landline service and opt for the alternative.
Wireless industry has not won the competition through sheer luck or favorable factors in the external environment but through careful planning and by being aggressive. First of all, wireless technology closely monitored customers’ behaviors and needs and responded to them in timely manner. Second, they gradually eliminated all incentives and advantages landline technology had. Wireless technology has also benefitted from the fact that many technology companies outside the industry identified commercial opportunities and now have become stakeholders. But at the same time, wireless industry has not shied away from using aggressive and something unethical business practices to hurt the economics of landline service and force customers to switch to wireless service.
