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Is the allure of copper fading?

By Scott Bradner

The US is beginning to catch up with much of the rest of the developed world when it comes to the prevalence of mobile phones but the rest of the world is not standing still. Only a voyeur would look forward with any pleasure to the constant inescapable one-ended babble of people exposing their personal or business underwear in public. But I expect there is a group of businesses that look forward to that future with even more disquiet than I do and those are the companies whose business plans depend on the continued value of buried and suspended copper.

Projections by In-Stat/MDR, an Arizona-based research firm and Nokia, the Finnish handset maker, estimate that there will be between 1.6 and 2 billion cell phones in use within the next five years. That is a lot of interrupted concerts, meals and meetings!

The ITU estimates that over 40% of the phones in the US are already cell phones. This is far lower than in some other countries but rather impressive considering the relative high cost of cell phone service in the US.

But, as noted by NWW columnist Keith Shaw back in June (ttp://www.nwfusion.com/newsletters/mobile/2003/0616mobile2.html), almost half of US phone users would drop their dependence on their landline phones and switch entirely to the cell phone if the price was right. According to CNN, 7 and a half million people have already gone cell-only and the number of landline phones in the US has dropped by more than 5 million in the last three years.

For people considering going the wireless route there are some things to consider. For one thing cellular coverage can still be spotty - a service that works well at your house may not work at the office and vice versa. But the most important difference, other than mobility, between landline phones and cellular service is that enhanced 911 (e911) does not currently work with cell phones. So if you call in time of emergency the rescue folk will not be able to find you unless you are together enough to know where you are and to tell them where you are. This deficiency is expected be fixed over the next few years, and may be fixed in some places already, but unless you plan to never get into trouble keep this in mind.

There is something else that another party to this situation must be keeping in mind. Phone companies have billions of dollars worth of copper wire buried in the ground or strung from poles. The primary purpose of these wires is now eroding and eroding the revenue of those phone companies who do not have a significant cellular infrastructure. So far the erosion is not all that significant (according to the FCC, the number of lines in use in December 2002 was about 188 million) but the handwriting is on the wall.

The phone companies can provide Internet and video services through their lines but losing the voice biz is going to have a very big negative, impact on their financial health. You and I might not cry over this (their employees will) but I fear that the FCC may try to "help" them at our expense and beware the helping hand of regulators.

disclaimer: Some are fearful of Harvard's "help" but it did not help with this column.