WASHINGTON-Wireless services may not pose as substantial a threat to the wireline industry as many have speculated, according to new research from the Phoenix Center.
“Wireless is not an effective intermodal competitor to wireline telephone service-at least to the extent that wireless offers a meaningful constraint on the market power of a wireline monopoly,” the group reported. According to the Phoenix Center, although there are exceptions, consumers do not generally consider wireless a good enough substitute for wireline that a small price increase for wireline service is unprofitable.
Furthermore, the group found that the structure of the wireless industry “abates the potential for meaningful intermodal competition,” noting that major wireless carriers, including Verizon Wireless, Sprint PCS and Cingular Wireless L.L.C., are owned by wireline incumbents. In fact, following the merger of Cingular and AT&T Wireless Services Inc., incumbent wireline carriers will service about 82 percent of wireless subscribers, the firm said.
Emphasizing its findings, the Phoenix Group quoted Duane Ackerman, BellSouth’s chief executive officer, and Chairman Duane Ackerman: “Wireless substitution is now a fact. That’s okay. We tend to own both.”
