Free article: Fixed-mobile substitution gathers pace
As mobile voice services become more affordable, users are increasingly
opting for the convenience and personalisation of mobile phones, even when a
cheaper fixed phone is available. This is leading to a steady increase in
the proportion of voice traffic in Western Europe that originates on mobile
networks, as shown in Figure 1.
Figure 1: Proportion of voice traffic in Western
Europe that originated on mobile networks, 1Q 2004–1Q 2006
However, the extent of fixed–mobile substitution (FMS) varies widely
between the countries of Western Europe. For example, in early 2006 the
proportion of total voice minutes that originated on mobile networks ranged
from 18% (in Germany) to 70% (in Finland).
While a variety of factors have some influence over the extent of FMS,
the affordability of mobile voice calls is crucial. Once it becomes
affordable for users to make a significant proportion of their voice calls
on mobile phones, there is little that fixed operators can do to halt
traffic migration to mobile networks. Even significant reductions in the
price of fixed calls will have little effect.
Despite declining prices for both fixed and mobile voice services,
overall spend on voice services is remaining relatively constant, as an
increasing proportion of voice calls are made at mobile rates (that is, at
rates higher than those for fixed calls). However, the implications of FMS
for individual mobile and fixed network operators vary widely. For example,
FMS does not always translate into increased spend on mobile voice services.
Some mobile operators have failed to increase voice usage sufficiently to
compensate for cuts in their voice rates. Very low pricing is not necessary
to stimulate a significant migration of voice traffic from fixed to mobile
networks – mobile operators can achieve this migration even if they charge a
healthy premium for voice services (compared with fixed voice prices),
provided that consumers can still afford the mobile services.
Fixed–Mobile Substitution in
Western Europe: causes and effects quantifies the true scale of FMS in
Western Europe, in terms of fixed-line substitution and the migration of
voice minutes from fixed to mobile networks, and includes data broken down
by country. The report considers a wide range of key metrics, such as the
proportion of households that are mobile-only; the proportion of voice
traffic originating on a mobile network; voice usage per capita; voice spend
per capita; fixed and mobile voice spend per minute; and the price premium
of mobile voice over fixed voice. The report assesses how these metrics have
changed over a two-year period, to provide insight into the rate of FMS and
its effects.