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The Current Trend
Montana's landline telephone service providers are losing active lines at an annual rate of 2 to 7 percent, estimated Geoffrey Feiss, .general manager of the Montana Telecommunications Association. At the same time, Montana's largest wireless provider, Verizon, invested more than $125 million in growing Montana's wireless network over the past five years and reported wireless phone usage up an average of 32 percent in 2006.
Qwest, Montana's largest land-line provider, reported an almost 8 percent decrease in active land lines between 2006 and 2007, while during that same period, Qwest's wireless subscribers grew by almost 5 percent in the company's 14-state coverage area.
Nationwide, consumers are increasingly relying on wireless service as their primary phones, some even eliminating land-line service all together. The National Center for Health Statistics reported 15.8 percent of American households using wireless service as their only telephones as of May 2008. Andrew Arthur, vice president of market solutions for the research firm Mediamark Research and Intelligence, found that number to be as high as 16 percent in 2007. Still, the majority of households, about 70 percent, had both wireless and land-line service.
In 2007, American households spent more on wireless phone services than land lines for the first time, reported the Associated Press. But, even more interesting, Arthur said, is that the total penetration of cell phones is now higher than land lines, meaning that the average household is more likely to have a cell phone than a land line. While not all land line losses in Montana can be directly linked to increased cell use, the correlation is significant. And although Montana's sparse population poses limitations to wireless coverage, most industry officials agree that statewide trends closely mirror what is happening nationwide.
"Montana has a tendency to think of itself as different from the rest of the country. But in reality, the economy is pretty free flowing, and we're not [so different]," said Dave Gibson, president of Montana Qwest. When it comes to consumer goods, Gibson said, Montana closely aligns with the rest of the country, and wireless trends are no different.
It is difficult to break down the numbers into state-by-state figures without compromising their credibility, especially in a state as sparsely populated as Montana, Arthur explained, because, as the number of people surveyed gets smaller, the data become increasingly less reliable. But, in the region of Montana, Idaho, Wyoming, and Colorado, Arthur found that 20 to 25 percent of people had gone wireless-only.
"The trend in Montana is essentially the same as nationally," said Jonathan Foxman, president and CEO of Cellular One, formerly Chinook Wireless. The benefits of wireless service, including mobility, security, and convenience, are compelling, Foxman said. "When the quality and coverage is sufficient that people can rely on wireless, they begin to question why they need wire-lines."
In Montana, however, the quality and coverage haven't yet reached that point, he said. Therefore, not all Montanans have the option to go wireless. For this reason, Montana is behind the adoption curve compared to more metropolitan states.
But, he said, it is catching up quickly. Cellular One, Chinook Wireless at the time, built 50 new cell towers in Montana in 2007, and Foxman is convinced that the demand for wireless coverage in Montana is growing along with the rest of the nation.
Simply put, "It's going to happen," said Gibson of the trend toward wireless in Montana. To keep their customers, Montana land-line providers, large and small alike, must offer a variety of options, including wireless in some cases. Other services such as high-speed Internet and Voice Over Internet Protocol (VOIP), basically phone services through the Internet, also offset the loss of residential land lines. "Right now, there are more and more choices. Consumers have options, and that's a good thing," Gibson said.
Still, much of Montana remains without reliable cell service. Montana has a lot of rural miles to cover, said Bonnie Lorang, general manager of Montana Independent Telecommunications Association, and larger companies tend to follow the highways and urban centers. "Typically in Montana it has been co-ops that work to provide services to all those rural miles."
The trend hasn't significantly affected Range Telephone Cooperative, which provides land-line service to parts of eastern Montana and northeastern Wyoming, said CEO Robin Stephens. Range operates in places that companies like Qwest wouldn't go, he said, and most areas don't have wireless service.
Still, even Range has seen an annual 2 to 4 percent decrease in active land lines for the past few years, Stephens said. But other services, such as high-speed Internet, offset the losses, and he doesn't expect them to grow beyond 4 percent. The recent oil and gas boom is bringing more new customers to eastern Montana every day, most of whom won't have the option to go wireless-only. The added revenue will continue to offset the losses and keep them from growing even as more customers drop their land lines in favor of wireless, he explained.
Range did build wireless towers in 2000 and operated them for two and a half years. Ultimately the venture proved too expensive. "You have to invest millions of dollars for only 1,000 customers, which is why big companies like Verizon and Alltel don't do it," Stephens said.
But Mid-Rivers Communications, another telephone cooperative operating in eastern Montana, has been providing wireless service since 1996, said General Manager Gerry Anderson. Because larger companies don't provide services in rural Montana, Mid-Rivers is the only company operating towers in most of its coverage area, he said.
Yet even Mid-Rivers is slowly beginning to see an impact from cell use. Most Mid-Rivers customers still have both a land line and a wireless plan, Anderson said, and very few use their wireless phones as their primary phones.
"Generally in Montana, wireless is a complement to, not a substitute for land lines," said Lorang. Companies that provide phone service often provide a variety of other services, such as high-speed Internet, which requires either a phone or cable line to operate. Customers who are receiving other services are more likely to keep their phone lines, she said.
This doesn't mean land-line providers are unaffected by the increase in wireless use.
"You don't have to lose customers to lose revenue," said Feiss. While land-line providers are retaining the majority of their customers, they are losing long-distance revenues to wireless providers, which are a major component of landline profits, he said. The price of long distance calling has decreased notably over the years. According to AT&T, the first transcontinental phone calls in 1915 cost $20 for the first three minutes, the equivalent of approximately $418 today.
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The first transatlantic calls from the United States to London cost $75 for the first three minutes in 1927, the equivalent of approximately $910. Today AT&T offers calls to London for nine cents a minute and unlimited calls within the country for only $30 a month. But long distance rates still can't compete with most wireless plans, which offer free long distance.
What the Future Holds
Like the rest of the country, most Montanans have both wireless and land line phone service. The question is: Now that they have both, will consumers begin to choose one over the other? "I can't predict the future," said Arthur, "but dual-technology households have flat-lined. They are holding steady at around 70 to 72 percent. The trends suggest that number will now begin to drop." And it will drop because people are dropping their land lines, he said.
"The question isn't if, but over what time frame," said Foxman. "There is no fundamental reason why people would want a phone tethered to a location."
The Appeal of Land Lines
However, some argue there is indeed a fundamental reason for a stationary phone: reliability in emergency situations. "The most important factor to consider when deciding whether to keep your land line is the different ways your local 9-1-1 center processes land-line versus wireless calls," wrote MSNBC's Consumer Man, Herb Weisman in 2006.
Most land lines provide the 9-1-1 center with the caller's physical street address. Cell phones provide latitude and longitude coordinates, accurate within 50 to 300 meters, according to Federal Communications Commission (FCC) requirements. FCC regulations will require wireless companies to provide more specific information by 2012, but for now, Weisman said, a number of wireless providers have been granted waivers for meeting the current 50- to 300-meter requirement.
Even when cell phones provide accurate coordinates, they cannot specify which floor someone is on in a multiple story building. And some cell phone companies use GPS systems that don't always work indoors because they can't "see" the satellites.
"A caller using a wireless phone could be calling from anywhere. While the location of the cell site closest to the caller may provide a very general indication of the caller's location, that information is not usually specific enough for rescue personnel to deliver assistance to the caller quickly," says the FCC Web site.
Wireless users make 50 million 9-1-1 calls each year, an estimated 30 percent of the total, says the FCC. The mobility of wireless does offer portable security that is otherwise unavailable. But they do not provide comparable security when contacting emergency services from home.
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