US consumers are turning to wireless and broadband as their main communications connection, marking the possible end for traditional telecoms networks, according to a report from Forrester Research.
The study found that, while new communication technologies currently have a small grip on the US consumer market, they are set to grow quickly.
Currently, 1.7 per cent of households have switched to wireless or broadband as their primary phone connection, but over five million US households will migrate to mobile and high-speed broadband networks by 2006, the study claims.
But while service providers offer an overlapping range of communications services, consumer budgets for these services will not grow significantly, said Forrester.
The analyst believes this will mean that consumers will be able to shop around for services, and will increasingly move from landline to wireless to get the same or more services for their money.
During the next five years, wireless will gain 11 per cent of household spending as the average number of mobile phones grows to 2.2 per household, said the report.
Five and a half million consumers will give up their second landlines, and 2.3 million will drop their primary line.
But while the process picks up pace in the US, it lags behind similar consumer shifts already occurring in Europe, according to Charles Golvin, senior analyst at Forrester. "Some of this displacement is already taking place in Europe even though the cost of wireless is higher," he said.
Although wireless calls are more expensive in Europe, the prepaid wireless market makes it an option for a wider section of the population than in the US. There is also the additional incentive of per minute billing for local calls in Europe, said Golvin.
The effect on the local and long distance service providers will be huge. "Traditional service providers, which today own 57 per cent of the consumer telecoms budget, will see their share reduced to 36 per cent in the next five years," he explained.
According to Golvin, more than $4.5bn of the losses will be in revenue from services such as voicemail and call waiting.
These come bundled with wireless services but are highly profitable for the fixed line local phone companies in the US.
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