MONTREAL - The future already looked bleak for land-line telephones in a wireless age, but a new study indicates that their best-before date is being radically bumped up by the Internet-based technology.
A study released Wednesday by Leger Marketing suggested that as many as 44 per cent of Quebecers subscribed to Internet or cable-based phone services in 2007, up from 16 per cent in 2006.
The study, which has a margin of error of 5.5 percentage points, surveyed 1,000 people as part of a wider look at Internet habits in the province.
"We were surprised when we saw the results,'' said Najoua Kooli, project director for the Montreal research firm that commissioned the study.
"Traditional phone use was expected to drop in the coming years and we're already starting to see it.''
The dramatic jump in voice-over-Internet Protocol (VoIP) technology is all the more impressive given it has only been widely available through cable in Quebec since 2005.
Analysts see a trend sustained by a demographic shift hardly unique to the province.
"As Generation Y increases its influence on the market these numbers will only continue to grow,'' said Carmi Levy, a technology analyst with AR Communications.
"The understanding of what phone service is is very different among the generation that has grown up among the Internet.''
VoIP technology offers significant discounts on long-distance calls along with more sophisticated options for customers.
Legacy phone service providers such as BCE Inc. and Telus Corp. have yet to become enthusiastic converts of VoIP, and only have nominal market offerings.
"Eventually everything is going to be VoIP,'' said Jon Arnold, a VoIP analyst and principal of J Arnold and Associates.
"It's going to be a long time before that happens and the telecom companies...will want to milk the land-line business as long as they can.''
But as the technology becomes more popular, legacy providers could face serious competition from smaller, more innovative providers.
Bell Canada is already losing clients to Quebecor Inc. subsidiary Videotron, which offers phone service as part of an Internet and cable package.
"Bell is certainly hurting in Quebec big time, Videotron is really taking it to them,'' Arnold said. "That's been a big cause for concern.''
Relatively small upstarts like U.S.-based Vonage Holdings are targeting consumers with offerings -- from phone-number guarantees to responsive customer service -- that the giants have difficulty matching.
"Their biggest challenge is inertia,'' Levy said of Bell and Telus. "They're so big and so entrenched that they can't move fast enough to bring innovative new technologies to market before smaller, more agile competitors.''
But Arnold points out that few small players have thrived in the Canadian market because the CRTC has been kind to Bell and Telus.
"Our regulatory climate looks after the carriers pretty well,'' said Arnold. "They have a lot of turf to defend against so they don't make it easy for VoIP to enter the market here.''
While few expect a radical departure in the CRTC's policy, some feel Canadians would benefit from a more open market.
"The Canadian government really does have an interest in encouraging competition and innovation,'' said Arnold. "The ability to communicate over long distances is critical and we really can't afford to be trailing edge. We have to be leading edge.''
