Press release: Fixed-mobile substitution is accelerating
February 2007 – As mobile voice services become increasingly affordable, they are
rapidly substituting for fixed voice services across Western Europe, according
to a new report, Fixed–Mobile Substitution in Western Europe: causes and
effects.
“Users are increasingly opting for the convenience and personalisation of mobile
phones, even when a cheaper fixed phone is available,” says Dr 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.”
Key findings of the report include:
- 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. Mobile voice usage already far exceeds that level 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.
- The growing use of mobile phones has helped to increase overall voice traffic
and maintain the level of spend on voice services in 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,” explains co-author
Dr 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.”
The new report 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. 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.