Northstream identified three key trends accelerating fixed-to-mobile substitution in Europe. First, increasingly individualistic lifestyles are driving demand for mobility. Second, decreasing prices for mobile voice services are lowering the barriers for migrating from fixed lines. And third, service providers are becoming more interested in fixed-to-mobile convergence as they increasingly address simplicity and cost control.

Of the markets covered in the study, Finland provides the best example of true substitution of fixed-line communication by mobile traffic. Fixed-line penetration into Finnish households was reduced to 49 percent in 2003, and there was a 22 percent reduction in the number of fixed-line calls. In other markets, such as Italy and Norway, the decline in fixed-line penetration is not as evident as in Finland, although Norway shows clear signs of falling fixed-line penetration. In Sweden and Germany, fixed-to-mobile substitution is being held back by lack of competition and resultant high price levels. And in Russia telecom growth is almost entirely focused on mobile communication, with nationwide penetration reaching 37 percent in July 2003.

Northstream concludes that fixed-to-mobile substitution is an irreversible evolution, and that mobile operators' 3G investments will benefit from larger volumes of voice traffic. By applying appropriate product and marketing strategies, the leading players will win market share through traffic growth in mobile networks. Notably, incumbent operators with both fixed and mobile offerings have more to gain by aggressively addressing the fixed-to-mobile substitution opportunity.