Phones Without Homes

The rise of the Internet and the telecommunications revolution of the 1990s was a boon to the wired-phone industry. In the mid-to-late-1990s, even as the number of wireless subscribers exploded, the number of access lines provided by incumbent local exchange carriers rose at a rate greater than that of the overall economy, with the number of lines rising nearly 24 percent from 142.4 million in 1992 to 186.6 million in 1999. Growth was driven in part by millions of people hooking up faxes and adding dedicated lines so that they could dial up to AOL. Since 2000, however, it's been a different story. Wireless has continued to boom, up from 109.5 million subscribers in December 2000 to 233 million in December 2006, but the number of land lines has fallen somewhere between 4 and 6 percent in every year since 2000. The result: The number of incumbent local exchange carriers' access lines in 2006 was back down to 140 million, about the same level as in 1991 and off about one-quarter from the 2000 peak. The growth and convenience of wireless have played a role, and so, too, have the rise in broadband Internet access and the availability of phone service from cable companies and outfits such as Vonage and Skype. But in the past year, a new and unexpected woe has been crushing the land-line business: the economy. In the past, a few quarters of slow growth wouldn't have meant really bad news for basic telephony subscribers. The telephone at home has long been a utility, not a discretionary item. But in this first real slowdown of the wireless age, consumers seem to be saying that home-based telephones are expendable luxuries, like Starbucks lattes or Coach handbags. And it makes sense. Confronted with high inflation, soaring energy costs, and stagnant wages, millions of households are facing choices about which monthly bills to pay and which commitments to maintain. And if it comes down to one or the other, the mobile or the home-based land line, it's clear which is a necessity and which is an option. One lets you make telephone calls only from your house. The other lets you make telephone calls from anywhere, send e-mails, surf the Internet, play music, and take photographs. At this rate of decline, within a few years the push-button wired telephone with service provided by a Bell company could be as rare and obsolete as a rotary phone is today.