Verizon is reportedly weighing whether to introduce a $5/month landline service. The service would be fairly limited, only allowing incoming calls and restricting outgoing calls to 911 and customer service. The reasoning behind the plan is obvious – Verizon lost 3.7 million access lines last year. The idea is outlined in a Wall Street Journal article (subs. required). Verizon is also considering a $10/month plan which would allow limited outbound local calling.
It’s an interesting idea. But will it work? One question we’d like answered is, will such a service escape regulatory charges like the subscriber line charge and other regulatory recovery fees and local taxes? All of those probably add up to more than $5, which would make for interesting bill presentment. Additionally, would such a plan actually accelerate losses associated with wireline, as customers see the $5 and $10 plans as incentives to give up more traditional (and higher ARPU generating) wireline calling plans. It could be an attempt to slow cable’s success with phone service and the triple play. Verizon has the largest wireless network (in terms of total subscribers) in the U.S. Perhaps this strategy is an attempt to steer customers towards a bundle of Verizon wireless and a ‘peace-of-mind’ landline for 911, over a competing bundled phone offering from cable competitors.
What do you think? Does this plan make sense? Provide your input using the comment tool below.
I like the idea. We would like to be able to offer our customers who are leaving us some alternative to leaving. I’m not sure about the business aspect (i.e. can you make any money), but the concept of offering something as opposed to just letting people disconnect makes sense to me.
You’re just delaying the inevitable. Maybe they take a $5 or $10 plan, but soon after, they’ll decide they don’t need that either. I think telcos should pursue more of an IP voice strategy to try to add value and features to a ‘landline’ service. Kind of like what verizon is doing with the hub. Voice service is now the domain of wireless carriers. Landline telcos should devote all their efforts to broadband, and figure out how to gracefully exit voice service.
It’s not about what the phone costs, it’s what the package costs. With most households wanting broadband, TV and phone, plus cell service, it’s not really about how much you pay for 1 component, it’s about how much you pay for the package. Verizon doesn’t currently offer a discount for combining cell service with their triple play for example. They recently reduced the price for my land line, but increased TV service even more so the total went up. I’m happy to have either Cable or FiOS and will look to minimize my total communication costs, which are currently more than I spend on either gasoline or electricity.
This idea makes perfect sense. Provide an affordable landline for security alarms and 911 service and then bundle with broadband and mobile services. If they could just integrate with a softswitch they could kill the unreliable vonage services.
The catch is the taxes, which will be much higher than the bill itself. If they could generate POTs at the curb and call it a VoIP line – then that would be competitive. The land line is much more reliable and would be worth a few dollars more than the VoIP if it had the same features – especially with the number of people working from home and looking to cut the number of mobile expenses (ie: why should each kid have their own mobile number – they can use the home phone)
This is precisely where I think landline is moving… voice services offered as a throw-in on top of other services.
Underlying technology (TDM vs IP) is of little significant concern to the end-user. Ease of use, convenience, etc are more significant matters.
While I was VP at a competitive carrier in Hawaii, we were first to market with VOIP. One of our features was the ability to have incoming calls ring multiple phones… first phone to pick up the call got it. That’s a service that would make sense for Verizon… allow a customer to “bond” his/her cell and landline numbers.
There in the islands, the incumbent LEC repackaged a cellular service, offering it under their own brand. A feature they offered was the ability to seamlessly move a call between the users cell & landline services (both had to be with the incumbent). For example, you’re on a call on your landline when you need to leave the house on an errand. You switch the call to your cell and take off. Nice concept, but proved to not have a huge market.
An intriguing but difficult to commercialize technology is multimode cell phones. They can be programmed to first seek a WiFi signal (to access the user’s VOiP account), then seek a cell signal. Pretty slick, but some implementation challenges from the carrier’s perspective.
I just tried the MagicJack for $19.95 per year. That’s $1.66/mo. Landline voice quality. I get unlimited local and long distance incoming and outgoing calls, voice mail, caller ID. I also get E911. If power goes out, I’ll have to rely on my cell phone for outside calls.
My Savings = ~$400/year. I’ll keep my cell phone and broadband of course.