The Rebirth of the Home Phone

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Each year, more and more Americans hang up on their home phones for good and switch to mobile devices instead.

Back in 2005, approximately 7% of U.S. households had ditched their landline and relied solely on cell phones. By 2008, that number had skyrocketed to more than 20%, according to data from the Centers for Disease Control and Prevention. In fact, of those households that do have a landline and a mobile device, one quarter admit they make nearly all of their calls from their cell phone.

More recent surveys suggest that this trend will only accelerate in the coming years. The Pew Research Group released a study in August that found that the vast majority of Americans 50 and older still feel that a landline is a necessity. However, the majority of those between the ages of 18-29 do not, and are more likely to cite their cell phone as a necessity rather than a luxury, which means that as they get older, the decline of landline phones may accelerate even more.

“Ten years from now, we are going to see very few traditional lines left,” said Mariam Rondeli, an analyst at SNL Kagan, a research firm that focuses on the media and communications industry.

But if the days of traditional home phones are coming to an end, you wouldn’t know it from the wave of innovative new products that have been released this year to enhance the landline experience.

Ooma, a California-based startup, recently put out the Telo adapter, a $250 device that connects your home phone to the Internet connection in your house to provide you with unlimited free domestic phone calls. Then, there’s the Ojo Vision Digital Video Phone, which attaches a high-resolution 7-inch LCD screen to your home phone so that you can video chat. And several companies including Panasonic and Cobra Electronics have put out Bluetooth-enabled home phones so you can make and receive calls on a headset around the house.

“The demise of the traditional landline is overstated,” said Allan Van Buhler, senior vice president of sales, marketing and business development at WorldGate, the company that produces the Ojo video phone. “What’s driven people from traditional landlines to cell phones is the desire for true mobility and a feeling that it’s no longer a great value for the money. But with our new device, we are providing a significantly new application.”

This notion of providing a new or improved use for an old gadget is the leading strategy for many of these companies, and necessarily so. To revive declining consumer interest in home phones, these products need to offer more advanced features to compete with what’s available on cell phones.

“We realize that a lot of people have cut the cord and are using cell phones at home, but in doing so, they are missing phone calls and losing service,” said Martha Whiteley, a spokesperson for Panasonic, which released a Link-to-Cell system earlier this year that lets customers make and receive cell phone calls through their landline. The system also can block incoming calls and put your home phone on silent, much as you would with a cell phone. “We’ve tried to bridge the home and the cell and really take the best of both worlds,” she said.

At the same time, these companies are also trying to remind consumers about what it is they loved about home phones in the first place, whether it’s the familiarity and nostalgia of using the device, or just the fact that you don’t usually have calls dropped.

“Many people have probably gotten used to the limitations of a cell phone and are just living with it, but when you move back to a landline, you remember all the niceties of that,” said Dennis Pang, vice president of product marketing at Ooma. As an example he notes all the signal problems that many cell phone users have, which are largely absent from landline phones. To capitalize on this difference, Ooma recently released a high-definition handset that further improves the audio quality of the landline phone so users can hear the person on the other end of the line even more clearly.

According to Van Buhler, the senior vice president at WorldGate, the real lure of the modern day home phone is even more fundamental than that. “It has become a kind of centralized communication device or command center,” he said.

Of course, just because there are new home phone products being offered doesn’t mean these companies can reverse the overall downward trend in the market.

“The home phone as we know it is definitely on the way out, but it’s just going to take a few more decades to go away,” said Jeff Kagan, a telecommunications industry analyst. However, as Kagan notes, until it does fade away for good, there will still be a sizable market for traditional phones.

That said, most of the major phone companies have already turned their backs on landlines and home phone units. At the end of last year, AT&T (Stock Quote: T) referred to landline phones as “relics of a by gone era.” Meanwhile, around the same time, the CEO of Verizon (Stock Quote: VZ) announced that the company had decided to stop caring about what happened to the landline phone market.

“The companies that provided traditional phone services now focus on the mobile market because that’s where the growth is,” Kagan said. “But there will be still be a need and desire for that old traditional way of doing things, which is why you’re going to find smaller companies providing the same service that the big companies once did.”

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