Wireline is dead, long live wireless

The changing demographics and new technologies are proving to be the death knell for the wireline phone service, according to Probe Research, a NJ based research group.

The ubiquity of wireless service and the migration of young users, from TV to video games and the Internet, will help bring an end to traditional telco and cable business models.

I am not sure about this claim, though i think big fat DSL connections and cable modem connections will help the old line phone companies and cable companies ward off competition from the wireless competitors. I think the analysts are making an overtly simplistic presumption. Hey how about our broadband connections. i think many of us are excited about Nextel Wireless Broadband and WiMax, but those technologies will be available only in a couple of years, at least at a national level.

“Access is no longer a monopoly, with cable broadband, mobile, and soon, a mass market for fixed wireless as well,” comments Allan Tumolillo, COO of Probe Group. “The underlying business model for landline telephony has formally ceased to exist and the stock markets no longer have faith in this sector.”

I agree with this part – I think the wireline voice business model is dead and the bells would be wise to push naked broadband connections as one way to hanging on to the revenues.

The cable market is likely to enter into a prolonged downward spiral as well. “The challenges of satellite delivery and the aging out of the TV market, with youth focusing on the Internet and video games, will undermine the core business models of much of the cable industry,” Tumolillo continued.

This statement assumes that cable guys will sit on their hands, twiddle their thumbs and not do anything. Cable guys can defend themselves by offering online gaming, fat broadband connections and IP telephony services. Pew Internet and American Life foundation survey says 55% of Internet users have a broadband connection and that home broadband use among respondents doubled over the previous year. In addition, cable business is always one Sopranos away from becoming hot again. I think the writers of the report are going in for shock factor. They are making a marginally bleak situation into a disaster.