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Baby Bells on hold
The Baby Bells have long been unassailable in their core market—providing local phone service to most US homes and businesses. But now the incumbents face real threats on several fronts: the number of fixed lines is dropping, DSL is losing out to cable broadband, and some customers are going completely wireless. Worse yet, McKinsey research shows that growth is slowing in call-management services, which generated 40 percent of the Baby Bells' gross revenues over the past six years.
The take-away: The growth of mobile telephony, whose providers offer call-management services that customers find easier to use than those on fixed lines, will further hurt local phone companies. That means the Baby Bells must renew their focus on developing and selling these services.
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© 1992-2003 McKinsey & Company, Inc
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