Cell-phone spending surpasses land lines in US

With Americans cutting the cord to their land lines, 2007 is likely to be the first calendar year in which U.S. households spend more on cell-phone services, industry and government officials say.

To be sure, when corporate cell-phone use is counted, overall U.S. spending surpassed land line spending several years ago, analysts said.

The most recent government data show households spent $524, on average, on cell-phone bills in 2006, compared with $542 for residential and pay-phone services. By now, though, consumers almost certainly spend more on their cell-phone bills, several telecom industry analysts and officials said.

"What we're finding is there's a huge move of people giving up their land line service altogether and using cell phones exclusively," said Allyn Hall, consumer research director for market research firm In-Stat.

• MSN Tech & Gadgets: Cell phones of the stars

As recently as 2001, U.S. households spent three times as much on residential phone services as they did on cell phones. But the expansion of wireless networks has made cell phones more convenient, and a wider menu of services, including text messaging, video and music, has made it easier for consumers to spend money via their cell phones.

"Frankly, I'd be shocked if (households) don't spend more on cell phones at this point," said Andrew Arthur, vice president of market solutions at Mediamark Research & Intelligence.

While there are roughly 170 million land lines in use nationwide, industry officials estimate there are close to 250 million cell phones. (These figures include residential and corporate use.)

More from MSN Money

• What a Google phone might look like
• Your phone may be under attack
• Yikes! Checked your cell-phone bill lately?
• 3 ways to toss an old cell phone
• Is cell-phone banking safe?

Text messages help drive revenues

While Rabe would not break out exactly how much Verizon's residential customers spend on cell phones versus land lines, he said cell-phone spending is clearly rising along with the growing popularity of text messaging and other services.

"As a company that once made the vast, vast majority of its revenue on phone calls, for 10 years we've been moving away from that and trying to re-establish ourselves in other businesses because we could see the traditional telephone was a mature business, it was not going to grow and indeed might even shrink," he said.

• Video: Verizon to open its wireless network

AT&T (T, news, msgs) did not immediately return a call seeking comment about its residential customers' spending breakdown.

Joe Farren, a spokesman for the wireless industry's main trade group, said household cell-phone spending is not something his group has tracked, but he added it doesn't surprise him if U.S. households now spend more on cell phone bills than on their traditional phones.

The 2006 phone spending data, collected by the Labor Department as part of a consumer expenditure survey of 7,500 households, asked respondents what they paid on personal local and long-distance services and cell-phone plans, including taxes.

Brett Creech, an economist with the Labor Department's Bureau of Labor Statistics, said Internet-based phone service was counted among expenditures for residential land-line service. However, so-called Voice over Internet Protocol will be a separate line item in the 2007 survey.

This article was reported and written by Dibya Sarkar for The Associated Press.

Rate this Article

Click on the stars below to rate this article from 1 to 5 Low

Thank you for rating.

High

• View all top-rated articles
• E-mail us your comments on this article
• Discuss in a message board