For the past 10 years, the telecom industry has been fixated on the demise of the home phone. For much of the early 2000s, journalists, analysts, and company representatives alike wrote article upon article lamenting how incumbent telecom service providers were losing hundreds of thousands of home phone lines a year. 

 

The rise of low-cost, ubiquitous broadband makes over-the-top solutions like Skype (News - Alert) and Vonage viable. Meanwhile, the impressive growth of terrestrial cable operators provided many homes in the U.S. with a second physical connection from which to receive services. And mobile phones have led a new generation of hyper-connected users to seem blasé about fixed lines, tending to eschew home phones altogether. 

 

Having been fed a steady diet of ‘the fixed line is dead,’ I was struck recently by the resurgence of fixed-line telephony products and services. Is this merely a ‘dead cat bounce’? Or is something deeper going on? 

 

Comcast, the largest cable operator in the U.S., recently announced it is the third-largest residential fixed-phone service provider in the U.S., now serving a staggering 6.47 million homes. Vonage (News - Alert) ended 2008 with nearly $1 billion in service revenues, supporting 2.6 million subscribers. 

 

Even mobile operators are getting into the home-phone business. T-Mobile (News - Alert), the nation’s fourth-largest mobile operator, provides fixed-line home phone service to an estimated 500,000 subscribers through its UMA-based @Home service. 

 

Yet 10 years ago, these three companies had an installed base of ZERO home phone lines (well, maybe Comcast (News - Alert) had a couple…). Clearly, something is occurring in the world of home phone services. While incumbents are losing subscribers, it appears that not all of the subscribers are ditching the home phone all together. 

 

Meanwhile, in the past few weeks, the number-one and number-two providers (presumably) of home phone service in the U.S., AT&T (News - Alert) and Verizon, have both announced new home phone equipment. It’s fair to assume these companies are looking to spice up the Plain Old Telephone Service, or POTS, to keep subscribers from defecting. 

 

AT&T announced HomeManager, a service that uses both a touch-screen tablet netbook as well as a traditional cordless phone to provide service. The HomeManager looks to beef up the staid POTS service by delivering visual voicemail and weaving in real-time access to local information, weather, news, and sports, as well as contact and calendar synchronization. The HomeManager is $349 and works with an existing home phone service over broadband. 

 

For its part, Verizon (News - Alert) has the Hub, which looks to be more of a basestation with a screen rather than a fully wireless touchscreen tablet. The Hub package includes unlimited calling to North American subscribers, but also includes integrated SMS and MMS capability for communicating with mobile users. It is a home phone service, so the customer pays $200 for equipment, along with a recurrent monthly $34.99 service fee. Ironically, the Verizon product is from Verizon Wireless, not Verizon. Verizon has since announced it will open an applications store for the development of widgets for the Hub. 

 

A personal favorite of mine, as well as a bit of a puzzle, is ooma (News - Alert). For a one-time fee of $249.99, customers get an ooma hub as well as unlimited calling within North America for the lifetime of the hub. The idea of receiving unlimited lifetime calling does sound intriguing. The puzzle, of course, is how ooma makes money off a one-time fee of $250, of which a chunk needs to go to recouping hardware costs. The company has a section on its Web site dedicated to answering just that very question.

 

It’s clear there is a tremendous amount of innovation around plain old telephone service. Is this just a rebound of a dead technology, or has the market finally realized that there is value in the home phone?

 

Long term, stand-alone home phone services will face more pressures. Bundling the home phone with other services, such as the mobile phone like T-Mobile and Verizon are doing, or with cable TV like Comcast, clearly make the overall offer more valuable.

 

Steve Shaw (News - Alert) (News - Alert), Vice President of Market Development at Kineto Wireless, writes the UMA: Mobile Convergence (News - Alert) and Beyond column for TMCnet. To read more of Steve’s articles, please visit his columnist page.

Edited by Greg Galitzine