Abandoning landlines doesn’t make sense for many — yet

SAN FRANCISCO (CBS.MW) -- In a few short decades, today’s children will tell their disbelieving kids that long, narrow cords once anchored telephones to outlets in the wall.

Traditional landline phones are facing a tandem attack from Internet calling services, or VoIP, and wireless phones -- both of which offer some distinct advantages to the standard handset-and-cradle. And a small but increasing number of Americans is making the leap to the cell-phone-only life. But there are plenty of reasons to stay anchored to the landline, at least for now, particularly for families with kids.

Among the concerns cited by consumers not yet ready to cut the cord: They need their phone line for Internet access, and they don’t feel comfortable relying solely on a cell given mobile-phones’ unreliable call quality, according to a Forrester Research report earlier this year.

But these barriers will soon fall. For each concern, there is «a dynamic going on in the market that in the next couple of years will change these people’s thinking,» said Charles Golvin, a principal analyst at Forrester Research.

For instance, as people migrate from dial-up to broadband, «’I need it for Internet access’ becomes less and less important,» he said.

Plus, «cell-phone service continues to improve. The carriers invest billions of dollars every year in their networks. Some of that is about new technology, but a lot of it is about improving service,» he said.

Mobile from the get-go

Already, these barriers are nonexistent for young adults: 46 percent of those who’ve abandoned landlines are 18 to 34 years old, according to Forrester.

Some «college kids may never have had a landline. At 14 or 15 their parents gave them a cell phone,» said Allan Keiter, president of MyRatePlan.com, a consumer price-comparison site.

As colleges increasingly switch from landlines to cell phones or VoIP service, students graduate not having used a landline in years. At that point, «why do I need to get a landline?» Keiter said. «The whole mindset is different. That’s where most of the growth comes from.»

Some 5.5 percent of U.S. households, or about 5.8 million households, now rely solely on cell phones, up from 1.4 percent in 2001, according to the results of 26,000 in-person interviews by Mediamark, a market research firm.

Show me a better plan

While those who’ve already cut their landlines are young and tend to earn about $34,300 on average, those who say they’re planning to do so in the future are older and wealthier.

Forty-five percent of those who plan to abandon their landlines are 35 years old to 45 years old and earn about $58,300 on average, according to Forrester Research.

They might be waiting for some improved cell-phone offerings before they make that move. For a family of four with multiple phones at home «it could get a lot more expensive to try to replicate that (landline service) with cell-phone service,» Keiter said, given that landline services offer unlimited calling for about $35 per month.

That doesn’t include long-distance, but that’s available for less than 3 cents a minute these days, with no added fees. On a cell-phone plan, «you’re paying for every minute both incoming and outgoing. You could blow through your bucket of minutes pretty quickly,» Keiter said.

To compare options, consumers must assess the minutes they spend on the phone. Many wireless carriers offer 1,000 «any time» minutes for $39.99 plus free long distance. As a general rule, if you’re hitting 1,000 minutes or more a month, a landline is likely cheaper, Keiter said.

That’s one reason wireless providers will soon offer, for instance, family plans that combine prepaid minutes with buckets of minutes, which may inspire more people to cut their landlines.

«One of the problems with family plans is ’I give Junior a cell phone and we’re sharing the same minutes and all my minutes are gone in three days,’» Golvin said.

If the kids’ phones are prepaid, they can’t make phone calls after their minutes are used up, except for permitted calls to, say, their parents’ numbers.

Another option for consumers to consider is VoIP. For instance, Vonage offers unlimited calling in the U.S. and Canada for $24.99. See full story comparing rates.

More than 12 million U.S. households could switch to VoIP by 2009, though the young Americans who are opting for wireless-only are unlikely to make the switch, according to a new study. See full story.

Not quite wireless yet

Those interested in snipping their wires should first consider the following:

Satellite TV, TiVo and DSL connections often require a telephone line. If you’re using one of those services, it might pay to stick to your regular phone plan. Or, consider scaling back to a bare-bones phone plan, available for about $15 a month, and make your telephone calls solely via wireless.

Some credit-card companies don’t allow applicants to use a mobile phone number as the primary phone number on the account. They insist on a landline number to activate the card, Golvin said, though this may change in the future.
Wireless service usually comes with free long-distance, an added incentive to switch, but remember it’s not free if you go over your minutes. «Long-distance on wireless is free, but you’re also using up air time,» Keiter said. Overage charges now average about 40 cents a minute, far higher than the long-distance rates of 2.75 cents a minute that Keiter offers on his site. «If you have a $39.99 (wireless) plan for 500 minutes and you end up talking 600 minutes, your bill just doubled.»

When your home-security alarm rings, the system uses a telephone line to dial out. Before you cut the cord, consider asking for the latest in home security: Wireless emergency signals. «ADT and Protection One are beginning to promote wireless replacements for the security infrastructure in the house, the part that dials out,» Golvin said. «They pitch it as a security upgrade because the nasty guy could come and snip your phone wire.»

While phone companies with a stake in wireless services, including Verizon, SBC and BellSouth, aren’t about to hawk the idea of ditching landlines, the trend towards a cell-phone-only life is helping to drive a surge in bundled packages, Golvin said. That means discounts to customers who buy everything or at least a few services -- local, long-distance, Internet access, satellite television and wireless phone service -- through one company. Consider researching what deals are available before dropping your landline.

No more «phoning home.» In a cell-phone-only world, everyone has a separate number. That can be a benefit or a drawback, depending on your lifestyle. Note: Companies may soon start offering services where one call will ring two cell phones at once, Golvin said, so the married couple awaiting word from the remodeler won’t miss the call.

While an enhanced 911 system is being addressed, currently emergency operators cannot determine your location if you dial 911 from your cell phone.