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Phone Companies Want You to Keep Making Calls

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Earlier this week, we talked about one traditional industry’s attempts to stay relevant. Thanks to competition from services like Netflix (NFLX) and Hulu, cable providers are looking for new and better ways to keep customers paying a fee for programs they can get a lot cheaper on the computer.

Meanwhile, phone companies are facing a similar issue with loss of relevance, albeit only with their most famous service. Because, really, who makes phone calls anymore?

Since the release of the iPhone (AAPL), people have spent less and less time talking on the phone. The reason, according to the Wall Street Journal, is simple enough. Smartphones have replaced many of the traditional benefits of phone calls: Google Maps (GOOG) means no more asking for directions, Yelp (YELP) means no more asking for restaurant recommendations, and Facebook (FB) means no more having to gossip over coffee.

Beyond that, most people text.

As a result, Verizon (VZ), AT&T (T), and other carriers have seen declines in revenue from their calling plans. Customers, realizing that they don’t need all of their minutes, are switching to cheaper options. Savvy consumers can even make free -- and some might say better -- calls with products like Skype (MSFT) or Sidecar on their phones.

In response, many in the industry are toying with the idea of eliminating per-minute calling plans and leaving customers with no option but to pay for unlimited phone calls. The idea is not unprecedented. Last year, AT&T stopped selling text messages in bundles, moving exclusively to unlimited plans.

On their end, representatives from several phone companies told reporters that they have made no final decision on whether or not to switch to unlimited plans. They also don’t know what those plans would cost.

Interestingly enough, the move away from minute-by-minute calling is almost the exact opposite of the trend in data plans. Seeing an opportunity, many telecom companies have stopped offering unlimited data.

Anything for a buck.

Still, even with the increased focus on data, voice charges are still phone companies’ most important source of revenue. As of last year, data accounted for only 37% of revenue.

What are the options? Find free Wi-Fi and start Skyping.
POSITION:  No positions in stocks mentioned.