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LONDON, UK, 30 July 2007

Fixed–mobile substitution (FMS) continues its relentless progress and shows every sign of accelerating – particularly in those countries that have experienced the most traffic migration already – according to a new report, The Acceleration of Fixed–Mobile Substitution in Western Europe: facts and figures, published by Analysys, the global advisers on telecoms, IT and media (http://research.analysys.com).

“In many markets it looks as if fixed voice is going to suffer not the slow and lingering decline many have predicted, but a rather rapid one,” says report co-author, Dr Alastair Brydon. “At the current rate of traffic migration, 90% of all voice minutes in Finland will originate on mobile phones by 2008.”

Key findings from the new report include:

- In five Western European markets, more voice minutes originate on mobile networks than on traditional voice and broadband networks combined.

- VoIP appears to have little impact on the migration of voice traffic to mobile networks. Paradoxically, it appears to release consumer cash for additional spending on mobile services.

- Finland had the highest level of fixed–mobile traffic substitution in Western Europe in the fourth quarter of 2005 – mobile-originated calls accounted for 64.6% of voice traffic. However, the country also experienced the greatest increase in this proportion during 2006, by 10 percentage points, to reach 74.6% in the fourth quarter of 2006.

- Traffic substitution is also progressing rapidly in markets that have previously undergone little FMS. Germany has experienced much less traffic substitution than the Western European average; only 17.5% of its voice traffic originated on mobile phones in the fourth quarter of 2005. However, this proportion increased by 6.8 percentage points – one of the highest increases in Western Europe – to reach 24.3% in the fourth quarter of 2006.

“The widespread introduction of home-zone tariffs in Germany is having a significant effect, which demostrates that mobile operators’ actions can significantly increase usage,” says co-author Dr Mark Heath. “Following years of usage stagnation, average outgoing mobile voice usage per subscriber increased by 23% during 2006.”

“What is particularly worrying for fixed-line operations is not that FMS is happening, but the pace at which it is happening,” adds Rupert Wood, principal analyst at Analysys Research. “Of course, fixed-network operators are looking to different sources of revenue for growth, but the accelerating decline in core voice revenue is damaging at a time when they are embarking on long and expensive next-generation network re-engineering programmes.”

The report is available online at http://research.analysys.com/store, priced at GBP1500 (approximately EUR2225) plus VAT.

Analysys provides strategy and management consultancy, information services and start-up support throughout the telecommunications, IT and media sector.

Media enquiries to Gina Ghensi on +44 (0)1223 460600 or email press@analysys.com.

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