A Comeback for Landlines?

Time Warner Cable this past week announced an app it calls Phone 2 Go that will work on any smartphone or tablet and that will let a Time Warner customer use their home phone plan on these devices instead of cellular voice. At CCG we have predicting for several years that somebody would do this and hopefully Time Warner is the first among many to try this.

This gives landline telcos the ability to fight back against the continued loss of voice customers to the cellular carriers. We all know that cellphones are more convenient than landlines, but cellphone voice is much more expensive. Take the typical household. They probably can buy an unlimited long distance plan for their home phone for $25 – $30 per month. But if each member of their household buys unlimited voice on a cellphone then each one is paying $20 – $30 per month for voice. Even with a family plan it’s far cheaper for a family to share one landline than it is for each of them to buy a cellular voice plan.

With this app calls are completed over the data connection on the smartphone or tablet, be that on WiFi or cellular data. The press release I saw was short on details and I have many questions about the specifics of the product. But it’s a great idea for telcos to fight back against the continuing loss of voice lines to cellular companies. For example, how does this plan handle having more than one call at the same time? How does it allow for incoming calls to be segregated by family member so that each person only gets the calls intended for them? These are all solvable issues and I’m just curious to see the specific Time Warner solutions.

Since there are also numerous free text messaging apps available for smartphones today, it would be possible for a smartphone customer with a Time Warner landline to buy only data from the cellular company and avoid paying for both voice and text plans. It’s not a big secret that the cellphone companies are making a fortune today on voice and text plans – cellular voice has a very high margin and text is nearly 100% margin. It will be interesting to see how the cellular providers react to Time Warner’s move assuming that the product gets traction.

This app is going to create a demand for data-only plans for cellphones and tablets. There are a number of data-only plans available for tablets today, but I have never seen a data-only plan for smartphones. However, one has to imagine that Sprint of T-Mobile will offer a data-only plan if there is public demand for it. Such a plan would still be quite profitable for the cell carrier. One might picture AT&T and Verizon trying to squelch this idea, but if additional telcos pick up on the idea it’s going to be hard to stop.

This could potentially stop the flood of landlines that are being dropped in favor of cellular numbers. This plan gives people the flexibility to build a voice plan in a way that best fits their needs. Many people who have dropped landlines may well want them back again if the landline connection also covers their cell phones.

One of the articles I read on this suggested that this would only work for companies that already offer VoiP. But I can’t think of any reason why this wouldn’t work for any company that uses a modern softswitch. Such switches can handle calls in multiple formats from multiple sources and should easily be able to handle a mix of TDM and VoIP calls. I can’t think of hardly any of my clients who could not make this work, assuming they could get the app.

This app raises regulatory issues. For example, does a call made over a cellphone’s data connection have the calling scope of the cellphone or of the associated landline? This kind of application completely blurs the regulatory distinctions we have maintained between cellphone and landline voice and might force the FCC to examine those differences.

I find it funny when people say that voice has become irrelevant, because just the opposite is true. There are more people paying for voice plans today than ever before in this country. What we have seen is an increase in the number of people unwilling to pay for both a landline and cellular line. This app is the first step towards making voice agnostic of the platform and it gives anybody with landline customers the ability to serve voice to any device. This actually gives a big advantage to landline companies because they can serve every line a customer has while the cellular companies can only serve cellular lines. In some ways this gives the advantage back to the landline providers. Let’s see if they are able to take advantage of the opportunity.