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Landline phones ringing up features
By Amol Sharma and Jessica E. Vascellaro
The Wall Street Journal
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Land-line telephones, welcome to the party. In recent years, as phone companies have beefed up their cellphones with a steady stream of enhancements, innovations to the old land-line phone have been slow to come.

But now, in a move largely designed to keep consumers from ditching land lines, phone companies are adding to home phones some of the features popular on mobile devices, like address books and text messaging. And equipment makers’ latest home and office phones include a range of new features like in-home video baby monitoring, instant messaging, and access to email and the Web.

The stakes are huge for the phone companies, especially those such as Embarq Corp., Qwest Communications International Inc. and Windstream Corp. that don’t own their own wireless networks and are most susceptible to the increasing consumer shift away from traditional phones to cellphones. A recent survey by Harris Interactive Inc. found that 11 percent of U.S. adults use only their cellphones to make calls.

Land lines have traditionally offered better call quality than cellphones, especially indoors. But even that advantage is eroding as wireless providers address the issue. Recently Sprint Nextel Corp. began selling a Samsung product in some markets that acts as a mini cell tower inside users’ homes, boosting a low signal to improve reception. It costs $50 and requires an additional $15 monthly subscription. T-Mobile USA, a unit of Deutsche Telekom AG, now sells phones capable of operating on home Wi-Fi hotspots, another method of improving indoor coverage.

Given these developments, companies selling land-line phones are putting a higher priority on developing sleeker phones with more features. “Any company concerned about defending a land-line customer base should be working on this,” says telecom industry consultant Rory Altman.

Embarq, a spinoff of Sprint Nextel that has about 6.7 million subscribers in 18 states, is adding an address book feature to its home phones, allowing people to look up an entry and dial it by speaking a name into the handset.

Embarq is also testing a text-messaging function for home-phone users in some markets. When a text message is sent to a land-line number, the home phone rings, converts the message into audio, and plays it back. The land-line phone user can reply with an audio message or press a button to send a canned text response such as “Thank you” or “Where are you?”

Those new features don’t require consumers to buy a new handset, so Embarq can roll them out quickly. But over time, the company hopes to offer a “digital home phone” that will have a screen showing addresses and voicemails and provide basic information like news, weather and sports. The company is already working with manufacturers to build that product. Verizon Communications Inc. is planning to offer a similar device called the Verizon Hub sometime next year.

“I think there’s a lot of opportunity to innovate around home phones,” says Embarq Chief Executive Dan Hesse. He says that while land-line phones haven’t changed much in the past decade, cellphones have seen a boom in innovation. “Why should cellphones have all the fun?” he adds.

Equipment makers are already creating more advanced land-line phones for both the home and office. Motorola Inc. has begun offering phones that include ringtones, phone books and instant messaging. One new phone even comes with a portable camera and intercom system that can wirelessly stream video and audio from any room in the house to the phone — serving as a potential replacement for a baby monitor.

VTech Communications Inc. recently began selling a phone offering features like weather alerts, directory search, e-mail and instant-messaging on a small color screen for $129 at select Best Buy stores. A soon-to-be launched GE InfoLink phone, made by Thomson Inc., displays Web content on a miniature screen above its keypad.

Greg Urban, product manager for Thomson’s Consumer Network Solutions division, says the technology is designed to “get people going with the things they need to start their day.” The device, which costs $179 for two phones and an additional piece of hardware needed to plug into users’ broadband connection, will go on sale later this year.

Meanwhile, some Internet-phone start-ups are trying to encroach upon the traditional land-line business by offering features that aren’t standard with regular land-line phone service. Internet-calling startup Ooma Inc. of Palo Alto, Calif., currently offers users a free second line as well as the ability to listen to voicemails through a Web site.

Altman says phone companies don’t need to get too fancy too fast. Just building easy-to-update contact lists into phones would go a long way with consumers, he said. “That would solve 70 percent of their problem,” Altman said.

AT&T Inc., the nation’s largest phone company, isn’t fighting the consumer shift, partly because its cellphone unit, which launched Apple Inc.’s iPhone this summer, is benefiting from the trend. Ralph de la Vega, AT&T’s group president for regional telecommunications and entertainment, said in some parts of the country, the company is no longer requiring customers to buy land-line voice service in order to get a discounted rate on high-speed Internet access. He says: “Our point of view is, if you don’t want it, we won’t force you to buy it.” The plan will be available nationwide by the end of the year.

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