Cell phones continue to erode land lines, pay phones
By Bruce Edwards
STAFF WRITER | January 06,2013
Albert J. Marro / Staff Photo
Pay phones, which are now hard to find in Rutland, are in decline along with residential land lines due to the surge in wireless phone usage.
Mobile communication devices continue to reduce the number of households in Vermont and elsewhere that are tied to a land line. Those same cell phones and smartphones are also responsible for a decline in the number of the once-ubiquitous pay phone.
FairPoint Communications, VTel and other legacy or incumbent phone companies saw the number of land lines in the state decline from 404,014 in 2004 to 301,784 in 2009, according to the latest figures available from the Department of Public Service.
Nationwide, the number of traditional land lines operated by the former monopolistic phone companies has steadily declined as residential and business customers have cut the cord and switched to cell phones. Other competitors like Comcast or Sovernet, which provide phone, Internet or cable television services, have picked up business as well.
FairPoint, the largest phone company in the state, reported that its land lines in Vermont declined from 213,690 in 2010 to 196,690 in 2011, a loss of 7.9 percent.
FairPoint, which purchased Verizon’s Northern New England land line business five years ago, has seen a steady decline in the number of residential and business lines.
But according to its third-quarter report, the company has slowed erosion of its overall land line business in each of the last 10 quarters. The year-over-year third quarter loss was 7.8 percent.
The news was better when it came to business lines.
FairPoint’s business voice-access lines declined 3.3 percent for the 12 months ended Sept. 30, compared to a loss of 6.3 percent for the 12-month period that ended Sept. 30, 2011.
For the third quarter, the company reported a loss of $37.3 million compared to a loss of $279.4 million for the same quarter a year ago, when the company absorbed non-cash losses related to intangible assets and goodwill.
An increase in FairPoint’s high-speed Internet products has made up for some of the loss in its land line business.
“We’re seeing a big increase in broadband subscribers and in fact in 2011 on a percentage basis we increased our broadband subscribers more than any of our peers,” said FairPoint spokeswoman Sabina Haskell. “The other thing that is really key is our business-class services, which are known as carrier ethernet (very high speed) products.”
Haskell also pointed out that the company has the “lion’s share” of the business that supports cellular phone companies, providing wired communications at cell phone towers.
Between 2008 and last year, she said, the company has invested more than $190 million throughout northern New England in upgrading its broadband infrastructure.
Haskell said more than 95 percent of businesses located within FairPoint’s service territory (Vermont, New Hampshire and Maine) have access to broadband. In Vermont, Haskell said broadband is accessible to more than 90 percent of its residential customers.
According to the Federal Communications Commission, the land line subscriptions nationwide for legacy phone companies like FairPoint have plummeted from 142.3 million in 2006 to 93 million as of June 2011. That drop-off coincides with the boom in the cellular phone business. Cell phone use has grown from 681,825 customers in 1986 to 290.3 million as of June 2011.
In Vermont, the FCC reports found that cell phone subscribers grew from 375,000 in June 2007 to 471,000 in June 2011.
The way people make phone calls has taken an even bigger bite out of the pay phone business.
The most recent FCC figures show a nearly 75 percent drop in the number of pay phones from more than 2 million in 1997 to 555,128 in 2009. The American Public Communications Council, a trade group, last year estimated the number at less than 500,000,
In Vermont, the PSD puts the number of pay phones at 1,350 in 2009 compared to 2,162 in 2004.
FairPoint sold its pay phone business in August and its 4,000 pay phones throughout northern New England to Pacific Telemanagement Services. FairPoint’s pay phone business in Maine, New Hampshire and Vermont was becoming increasingly unprofitable, generating only $1 million a year in revenue, the company said in a press release announcing the sale.