Is the allure of copper fading?

The U.S. is beginning to catch up with much of the rest of the developed world when it comes to the prevalence of mobile phones, but the rest of the world is not standing still.

Only a voyeur would look forward with any pleasure to the constant inescapable one-ended babble of people exposing their personal or business underwear in public. But I expect there’s a group of businesses that look forward to that future with even more disquiet than I do, and those are the companies whose business plans depend on the continued value of buried and suspended copper.

Projections by In-Stat/MDR and Nokia, the Finnish handset maker, are that there will be between 1.6 billion and 2 billion cell phones in use within the next five years. That’s a lot of interrupted concerts, meals and meetings!

The International Telecommunication Union estimates that more than 40% of the phones in the U.S. are cell phones. This is far lower than in some other countries but impressive considering the relative high cost of cell phone service in the U.S.

But, as noted by Network World columnist Keith Shaw in June, almost half of U.S. phone users would drop their dependence on their landline phones and switch entirely to the cell phone if the price was right. According to CNN, 7.5 million people have already gone cell-only and the number of landline phones in the U.S. has dropped by more than 5 million in the past three years.

For people considering going wireless there are some things to consider. For one, cellular coverage can be spotty.

But the most important difference, other than mobility, between landline phones and cellular service is that enhanced 911 (e911) currently does not work with cell phones. So if you call in time of emergency, the rescue folks will not be able to find you unless you are calm enough to know where you are and can tell them. This deficiency is expected be fixed over the next few years, and might be fixed in some places already, but unless you plan to never get into trouble, keep this in mind.

There is something else that another party to this situation must keep in mind. Phone companies have billions of dollars worth of copper wire in the ground and on poles. The primary purpose of these wires is now eroding and eroding the revenue of those phone companies that do not have a significant cellular infrastructure. So far the erosion isn’t significant, but the handwriting is on the wall.

The phone companies can provide Internet and video services through their lines, but losing the voice business is going to have a very negative effect on their financial health. You and I might not cry over this (their employees will), but I fear that the FCC might try to “help” them at our expense – and beware the helping hand of regulators.

Disclaimer: Some are fearful of Harvard’s “help,” but it did not help with this column.