Cellphones to eclipse land lines

Globe and Mail reports that cellphones cellphones overtake landlines in Canada.

Cellphones have become so popular in Canada that they are about to eclipse the use of traditional wire lines for the first time as the wireless industry continues to grow in reach and profitability.

There were 18 million wireless subscribers at the end of 2006 — about the same number of fixed access lines. That doesn't include more than 740,000 subscribers who have transferred to cable telephony services.

The surge in cellphone use has been extremely lucrative for the mobile phone industry, whose operating profits — before taxes, interest and depreciation — increased by 67 per cent to $1 billion in the last quarter of 2006 from a year earlier, Statistics Canada said in a report issued Monday.

In the traditional phone industry, quarterly profits fell 24 per cent to $675 million as revenue declined 1.5 per cent to $5.6 billion, while wireless revenue grew by 16.2 per cent to $3.4 billion.

The higher margin wireless industry saw its operating profits grow by 41 per cent last year to $4 billion while wireline earnings declined 14 per cent to $3.5 billion despite recording $10 billion in additional revenues, the agency said.

The financial shift has been particularly challenging for Bell Canada, which has struggled to keep up with its wireless competitors as it hemorrhages wirelines customers.

Voice revenues per subscriber are declining even though revenues from data transfer is growing.