WASHINGTON — 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.
The most recent government data show that 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.
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 phone.
"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.
To be sure, when corporate cell-phone use is counted, overall U.S. spending surpassed land line spending several years ago, analysts said.
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.)
Eric Rabe, senior vice president for media relations at Verizon Communications Inc., said the company's wireless revenue has grown between 15 percent and 20 percent annually for the last five years, whereas its traditional land line business has been flat year to year, in large part because more than 90 percent of U.S. households already have them.
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.
AT&T Inc. 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.