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In a cellular world, landline telecoms struggle to define themselves

As their markets shrink, landline companies shift their focus from POTS to a more integrated approach.

From bundled quadruple-play offerings to combination phone/baby monitors, landline operators and manufacturers are struggling to keep customers in an increasingly mobile landscape. It is not an easy sell.

Last month, New York-based Mediamark Research published a study saying that, for the first time ever, more Americans live in cell phone-only households (14%) than in landline-only households (12.3%). And cell phones are not the only threat: A recent study from Campbell, Calif.-based Infonetics Research found that the number of worldwide residential and small office/home office (SOHO) VoIP subscribers nearly doubled between 2005 and 2006, to 46.5 million.

Still, the future is not necessarily all bleak for Alexander Graham Bell's storied invention.

"The trend has been toward mobile," said Tom Valovic, program director at Framingham, Mass.-based IDC. "But I think the larger trend has been to diversify one's communication options. In a way, I think the industry is moving toward the proliferation of options rather than any one solution."

Almost three-quarters of households now have both cellular and landline phones, according to the Mediamark study. To retain that market share, landline providers and manufacturers have been innovating with the services and perks they offer.

Getting on board with bundles
For providers with both cellular and landline networks, offering bundled services has become an attractive alternative.

Verizon, for example, has linked its cell phone plans with landline subscriptions, providing the customer with only one bill at the end of the month. Verizon has also added the perk of unlimited calling between the two lines. For customers willing to cede all communications to Verizon, quadruple-play bundles are also available, adding video and Internet access to the mix.

The situation is tougher, however, for companies like Qwest Communications International Inc. that do not own extensive cell networks to fall back on for revenue as consumer demands shift. In the case of the Denver-based Qwest, the company has struck a deal with Sprint to offer bundled services by creating a Mobile Virtual Network Operator (MVNO), an arrangement that allows it to use the network of established wireless providers.

Aside from bundled services, landline telecoms have also begun to offer a bevy of specialized features to the consumer market: Among the new features for consumers are call following, special rings to indicate the caller and simplified conference calling.

Several companies, like Sprint spinoff Embarq Corp., have also experimented with connecting text messaging to landlines either by adding a screen and keyboard to new phones or by using text-to-voice and voice-to-text services that connect the old and new worlds of telephony.

In the future, Valovic said, telecommunications will converge, with operators making it easier for consumers to move seamlessly between different mediums, whether that means combining their various voicemail boxes into a centralized location -- a service GrandCentral Communications offers -- or equipping home users with Femto cells to make a cellular call as clear and reliable as a landline call, an area in which many manufacturers are experimenting.

For telecoms struggling to define a strategy, Valovic recommended avoiding a "race to the bottom" in which telecoms offer cheap -- and often poor quality -- VoIP; instead, he said they should focus on developing integrated, useful technologies and on marketing them properly.

"One thing that carriers need to do is to develop more control over their understanding of customer information, of business intelligence," he said. "Carriers need to develop more sophisticated methods to target the needs and wants of their customer base."

Ultimately, the business models that will be sustainable, Valovic said, are the ones that can unify the communications experience effectively.

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