"We're the mobile generation, we don't need landlines." A colleague in Dublin who recently expressed this sentiment is one of several who, on moving into new homes recently, have opted to use their mobile phones rather than install a fixed line.
They represent the early adopters of what mobile phone companies hope will become a trend known as wireline substitution, using the mobile phone instead of the traditional phone.
To encourage such a trend, mobile operators around Europe are shifting their competitive focus. The past decade has been characterised by second and third mobile operators launching networks in European countries, with resulting competition among mobile operators. But analysts predict sales of mobile handset are peaking, and growth will level off in coming years.
To compensate, mobile operators want their customers to make more calls, encouraging them to use their mobile phones instead of wireline phones. Industry analysts say the mobile operators are now dropping call charges to compete with wireline, and price wars are starting.
At a recent telecoms billing workshop in Paris carriers predicted large falls in wireline wholesale call rates over the coming 12 months. Ms Magrit Sessions, managing director of Phillips Tarifica, the London-based telecoms consultancy which hosted the workshops, said the carriers predicted wholesale price reductions of 30-70 per cent for international rates, cuts of 25 per cent for national rates, and cuts of 5 per cent for local rates.
"Retail rates will fall too," Ms Sessions said, "but not by the same margin." Mobile operators are already moving. Ms Sessions described the recent packages announced by British operators One 2 One and Vodafone as "incredible". From this week One 2 One will offer just two call rates for national calls: 10p per minute peak rate, and 2p per minute off peak (evenings and weekends). Significantly, these rates are available to both pre-pay and post-pay customers. Until now, most operators have charged prepay customers considerably more for calls.
One 2 One said the 2p per minute prepay tariff was "designed to attack a market segment that has to date resisted signing up to a contract and [has] been reluctant to pay the higher-pence-per-minute prepay call charges." It said its research showed this was a sizeable market. The company also announced a flat rate of 5p per minute for business customers.
Britain's largest mobile operator, Vodafone, for its part announced price cuts and increased talk time on its bundled tariffs from May 1st. Meanwhile, the incumbent Cellnet, owned by British Telecom, earlier this month announced it was giving customers free evening and weekend calls to two nominated wireline numbers. Cellnet also announced a name change, to BT Cellnet, reflecting the desire to more closely couple the landline and mobile services.
Underpinning this coupling of mobile and wireline service, BT Cellnet is introducing a dual landline/mobile phone, called the Onephone. This will make and receive calls via a base set in a customer's home, using the same technology found in many domestic cordless phones, known as DECT phones.
But when out of range of the base set, the Onephone becomes a mobile phone, using BT Cellnet's network. Both BT and BT Cellnet have collaborated to allow Onephone customers use a single number to receive calls, whether at home via wireline or away from home via the cellular network.
The Onephone is not the only new technology to encourage the use of mobile phones at home. Two other technologies already exist which can provide cheaper calls from offices or homes. The purpose of these is to encourage wireline substitution, but it is too soon to see if they are being adopted widely.
The first technology is a software addition to cellular networks which allows the network to know when a mobile is in its home cell. Called variously differential billing or home-zone billing, variants of this service have been tested by many European operators, including One 2 One, Denmark's Sonofon, and Germany's Manesmann.
Such systems rely on geographic information systems, which tell the network when a user is in his or her home cell. Mr Mark Flolid, the executive vice-president of sales and marketing for SignalSoft, which supplies location information software for communications networks, said all the major wireless carriers were investigating home-zone billing, or running trials.
Mr Flolid said home-zone billing would personalise the service offered by mobile operators, making customers less likely to switch operators, or churn. "It's sticky," he said, using a term more usually associated with websites which encourage web surfers to stay a while.
Signalsoft's European marketing director, Mr Robert Blair, predicted homezone billing would increase revenue for a mobile network of 1 million customers by between $250 million to $320 million (€235E300 million) over five years. He said both mobile operators in Ireland were looking at the service, but because home-zone billing was like "robbing Peter to pay Paul," he predicted Eircell would offer it first. Others are less sure. The executive director of the European Billing Association, Mr Alex Leslie, is not optimistic home-zone billing will take off. He said operators were holding off on investing in the new technology because impending price cuts may lessen its value. "If mobile rates come to near wireline prices the concept of home zone becomes irrelevant," he said.
Ms Sessions agreed that mobile and wireline prices will continue to drop, but said we were still far off seeing mobile prices less than or equal to wireline prices.
A second wireline substitution technology may prove less sensitive to price changes. Known as pico-cell, this involves installing a tiny cellular transmitter/receiver inside a building, and is aimed at business users.
Pico-cells effectively give businesses their own private cells, the mobile equivalent of a PABX.
Even if mobile call rates drop significantly, pico cell technology will still offer advantages including free mobile-to-mobile calls within offices, and higher data rates to phones when third-generation cellular is launched in about three years. Eoin Licken may be reached at elicken@irish-times.ie.
