Cutting The Cord

While an overwhelming majority, 88%, of U.S. households have a wireless phone in 2009, most still maintain a traditional landline at home. However, this is changing. In the second quarter of 2009, over one in five households reported they are wireless cellular only—an increase of 16% from the past year. This increase comes from the two-thirds of households who have dropped their landlines as well as from young adults that started new households with just a wireless phone service.

Expanded Mobile Media

This year all media player products in the market have seen growth. Given an increase in availability, product options and cost reductions, these types of products have become more mainstream. With one-third of households owning gaming devices and digital video recorders, they are becoming well established products that continue to exhibit healthy year-over-year growth rates. Growth of portable MP3 music players without video capabilities leveled off in 2009 at 25%. Adoption of other alternative media player products is still in the early stages, although all have exhibited growth this year. Most notable are devices that offer video capabilities.

Download more highlights from Nielsen’s 2009 Convergence Audit.

Cord Cutting Craze
Wireless/cellular only homes, which grew by 20% in 2008, now account for 18% of all U.S. households.  One-third of the wireless-only households have never had a landline, while the remaining two-thirds are cord cutters. Not surprisingly, cord-cutter households tend to be younger and are more likely to rent/lease their home.  Expect the wireless-only trend to grow, as homes continue to drop their landlines and young adults start new households with wireless phone service only.

Smartphone Surge
Both the Blackberry and the iPhone saw tremendous growth this year, reaching penetration rates of 6% and 2%, respectively.  The two wireless devices have attracted very different customers, however.  While the Blackberry appeals to a somewhat older, suburban consumer looking for a proven technology, the iPhone attracts a younger, urban consumer looking for the newest technology.

Mobile Media Malaise
Growth of cellular phones with streaming video or MP3 music players slowed in 2008, with penetration levels similar to those seen last year.  Among current owners, use of advanced services, such as streaming video and audio, decreased this year – a potential red flag.

Fiber Optic Future
Fiber optic TV grew at a measured pace, with penetration up 50% this year — from 2% in 2007 to 3% in 2008.  By comparison, cable and satellite usage was flat over the last year.  Look for dramatic future growth, with fiber optic TV penetration hitting 10% within the next two years and attracting an exceptionally affluent customer base.

Nielsen’s tip for telecom marketers: stress the value of your products.  Consumers will continue to seek out the latest “bells and whistles,” but they’ll be weighing the costs and the benefits more carefully than ever.

View Nielsen Claritas’s complete report.

Seventeen percent of U.S. households — 20 million homes — have already ditched their home landlines, relying instead on mobile phones, Nielsen reported.

These “wireless substitutors” tend to live in smaller households with just one or two residents and have lower income-levels — 59% have household incomes of $40,000 or less.  A significant number moved (31%) or changed jobs (22%) just before discontinuing their landline service.

“In a tightening economy every dollar counts, and consumers are more and more comfortable with the idea of ditching their landline connection,” Alison LeBreton, vice president of client services, Nielsen Mobile, noted.

The percentage of wireless-only households has grown steadily since 2003, when just 4.2% of U.S. homes had cut their landline service.

Still, Nielsen’s research shows that wireless substitution doesn’t work for everyone.  Ten percent of current landline users experimented with cord-cutting at one point, but eventually reinstated landline service.

View the full press release.

Read the white paper, “Call My Cell: Wireless Substitution in the United States.”

Explore coverage of Nielsen’s findings in The New York Times, the Los Angeles Times, Adweek, MediaPost, Wireless Week, and on CNET.com.

Of the 13 million mobile data card users in the U.S. as of Q2 2008, 43% most often use their data card at home, while 15% typically use the card at work, and just 9% use their card while commuting. 

Most of the 1,300 mobile card users Nielsen surveyed (99%) have kept their home Internet service providers, but 59% are considering swapping their cable, DSL, and other wired Interent service for exclusive data card use. 

“As carriers continue to promote mobile data cards and expand their network coverage, mobile data cards will play an increasingly important role in home Internet access,” Nic Covey, Director of Insights, Nielsen Mobile, noted.  “Consumers don’t like to pay for the same thing twice, and so certain segments of consumers will consider these data cards as an exchangeable alternative as speeds increase.  It’s the next frontier of cord cutting.”

View the full press release.

Read GigaOM’s coverage of Nielsen’s findings.