New communication services, such as those offered by AT&T Wireless and Sprint's PCS business, have already replaced landline service in 1.7 percent of households.
By 2006, more than 5 million U.S. homes will start using mobile and high-speed broadband networks as their primary connection, according to Forrester. That would make wireless services the primary means of communications in 11 percent of households.
The migration away from landlines will cost the current telecom behemoths, such as SBC Communications and Verizon Communications, as much as $8.8 billion overall. Both companies are alreadyinto DSL (digital subscriber line) and "third generation" enhanced services as interest in traditional phone service dwindles.
"Half of this loss--more than $4.5 billion--will come out of lost revenue from highly profitable services such as voice mail and call waiting," said Charles Golvin, senior analyst at Forrester.
Golvin predicts that broadband providers' offering of voice over IP service in 2002 will also take voice business away from traditional telephone companies. By 2006, voice over IP is expected to displace more than 4 million traditional lines and around $1.5 billion in revenue, he said.