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Mobiles replace fixed voice services in as rates fall

Antony Savvas

As mobile voice services become increasingly affordable they are rapidly substituting fixed voice services across Western Europe, said telecoms research firm Analysys.

An Analysys report, ahead of next week’s 3GSM Conference in Barcelona, says the trend is expected to continue.

“Users are increasingly opting for the convenience and personalisation of mobile phones, even when a cheaper fixed phone is available,” said Alastair Brydon, co-author of the report.

“Despite falling fixed and mobile prices, overall spend on voice services is holding up well, as mobile users choose to make more expensive mobile calls instead of fixed calls,” he said.

The report says fixed–mobile substitution (FMS) is accelerating and could result in more than half of all voice traffic in Western Europe originating on mobile phones by the end of 2008. The report says mobile voice usage already far exceeds that level in Austria, Finland and Portugal.

The extent of FMS varies widely between countries. The percentage of households that are mobile-only in Finland is five times greater than in Sweden. In early 2006 the proportion of total voice minutes that originated on mobile networks ranged from 18% to 70% across Western Europe.

“Our analysis shows definitively that the affordability of mobile voice calls is the key factor in the level of FMS in a particular country,” said report co-author Mark Heath.

“Once mobile pricing becomes affordable, there is little that fixed operators can do to halt traffic migration. However, some mobile operators have damaged their revenue by cutting prices too much.

"Very low pricing is not necessary and mobile operators can achieve significant traffic migration even with a healthy price premium over fixed services,” he said.

Mobile predictions for 2007

3GSM World Congress

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