Tuesday, April 04, 2006

Cutting the Landline

A new survey of cell phone use, How Americans Use Their Cell Phones, by the Pew Internet & American Life Project, the Associated Press, and AOL confirms trends documented by the Bureau of Labor Statistics Consumer Expenditure Survey. Young adults are increasingly dependent on cell rather than landline phones. 

A small number of Americans use cell phones only—perhaps 7 to 9 percent, according to the cell phone survey report. Those who do are disproportionately under age 30. The figure may grow—and rapidly. Among 18-to-29-year-olds who use landlines, a substantial 40 percent say they are somewhat or very likely to give up their landline in the future. Among adults aged 30 or older, only 19 percent say they are somewhat or very likely to cut the landline. 

According to unpublished data from the 2004 Consumer Expenditure Survey, householders under age 25 spend 51 percent more on cell phone than landline service. Among 25-to-34-year-olds, cell phone spending is below landline spending, but not by much. Of course spending more on cell than landline service is different than giving up a landline altogether. The cell phone survey shows that those with cell-only service are disproportionately poorer than other households and have probably given up their landline to save money. 

Will the profile of cell-only users become more upscale in the years ahead? That depends on the decisions made by today's teens and young adults when they establish their own households. But there's no doubt that cell phone spending will soon surpass landline spending. In 2004, households spent $69 billion on landline service (down from $91 billion in 2000, after adjusting for inflation) and $44 billion on cell phone service (up from $14 billion in 2000). At those rates of change, the crossover could occur this year.

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