Archive for August 29th, 2002

When cell phones become home phones

August 29, 2002



The NYT has an article today about how the number of fixed line phones is going down as people acquire cell phones, since rates have dropped and people find it convenient to have a single cell phone or multiple ones. An added advantage is the fact that when one moves one can keep the number as you change places.


It is interesting to look at what has happened in Venezuela in the last few years, with the caveats that Venezuela did not have the penetration of fixed lines that the US did when cell phones became widely available. Similarly, there is the fact that in Venezuela the billing system is “calling party pays”, which implies that people are more prone to give out their numbers to others since the caller pays the full call.



1996 1997 1998 1999 2000 2001
Fixed Lines 2,666,845 2,803,977 2,517,220 2,470,756 2,520,586 2,692,773
F.L. Penetration 11.95% 12.31% 10.83% 10.42% 10.49% 11.07%
Cell Phones 499,116  1,102,948  2,009,757  3,784,735  5,447,172  6,472,284
C.P. Penetration 2.24% 4.84% 8.65% 15.96% 22.54% 26.28%



Note that since 1996 the number of fixed lines has essentially remained constant, while the number of cell phones has increased from practically nothing to close to six and a half million phones in a country of 24-25 million people. The increase is very impressive. Obviously, phone companies have found it cheaper to sell cell phones in a country which had a deficient fixed-line infrastructure, but it is also true that cell phones are a cheaper alternative even in a country with a GDP per capita much lower than the US or other developed countries. It is also more convenient to have it on you everywhere, except perhaps for Internet access, which requires a fixed line. We suspect, the trend in the Venezuelan case will be followed elsewhere as time goes by and the NYT report is simply the first indicator of that trend.