Canadians are increasingly ditching their home phone lines and going wireless-only, a cord-cutting trend that is poised to accelerate over the coming years.
As cellular plans fall in price, more than one in five households will be wireless-only within two years, according to a new report by Convergence Consulting Group Ltd.
The trend away from land lines is gaining traction as wireless plans decline in price because of increased competition among mobile service providers. New entrants, including Wind Mobile, Mobilicity and Public Mobile, are offering combined voice and data plans that are more than 40-per-cent cheaper than the big three incumbents, the report said.
"Once these all-in packages become available to people, it makes sense for particular demographics not to have a home phone any more," Convergence president Brahm Eiley said in an interview.
The report estimates that 14.8 per cent of Canadian households were wireless-only at the end of 2011. That's up from 11.4 per cent at the close of 2010.
Convergence estimates the figure will hit 18.1 per cent by the end of this year, and 21.6 per cent by the conclusion of 2013.
Younger Canadians are the most likely to go wireless-only, Mr. Eiley said. That group includes both cord cutters and those who simply never get a land line once they leave their parents' homes.
In 2011, phone companies lost 7.4 per cent of their residential telephone wire lines, the report said. More than half of that loss was caused by people substituting wireless phones for their old home lines.
The increase in residential cord cutting is creating challenges for traditional telephone giants such as Bell Canada, which now have a smaller customer base "in which to gain new Internet & TV subscribers or retain existing subscribers," the report said.
Cable companies such as Rogers Communications Inc. have traditionally enjoyed a relatively high overlap of TV and Internet customers, which makes it easier for them to snag new home phone subscribers from their telecom rivals.
Cable companies controlled 35 per cent of the residential telephone market at the end of last year. The report notes that cable providers are adding new home phone customers at a slower rate than in previous years, but says they still have room to poach more subscribers through the use of bundled packages that provide a discount for taking more than one service.
"Customers that that take multiple products are much less likely to churn [leave the company]" Mr. Eiley said. "The most vulnerable are your one- and two-product customers. You want to keep that bundled overlap if you can."
At the end of 2011, the new entrants in the wireless market had 4.3 per cent of Canadian wireless subscribers. Convergence expects the newcomers – which also include Vidéotron Ltée, a unit of Quebecor Inc., and Halifax-based EastLink – to control 6.5 per cent of the market by the end of this year.
By the time 2014 draws to a close, the new entrants will have 10.6 per cent of the market, according to the report, entitled The Battle for the North American (US/Canada) Couch Potato.
Cutting the cord
The proportion of Canadian wireless-only households
2009: 8.8 per cent
2010: 11.4 per cent
2011: 14.8 per cent
2012: 18.1 per cent
2013: 21.6 per cent
Source: Convergence Consulting Group Ltd.