When I was talking to Truphone CEO Geraldine Wilson recently, she made the comment that Truphone expects an increasing proportion of its business to come from landline minutes substitution, rather than the big mobile operators.

Mobile calls as a substitute for landline calls fall into two categories. The increasing size of mobile call bundles means that many users have enough minutes included to ‘forget’ about their landline and just pick up their mobile for every call. Ofcom’s 2008 Communications Market Report highlighted some interesting points:

Mobile telephony (including an estimate for messaging) accounted for 40% of the total time spent using telecoms services, compared to 25% in 2002. However, much of this growth has come about as a result of an increase in the overall number of voice call minutes (from 217 in 2002 to 247 in 2007) rather than because of substitution with fixed voice, which still accounted for 148 billion minutes last year, down only 10% from 165 minutes in 2002.

However, fixed-line voice has remained resilient, with overall outbound minutes falling by just 2% to 148 billion minutes in 2007. Sixty per cent of voice minutes originated on fixed lines in 2007, and in Q1 2008 just 12% of households had no fixed line (with 11% of households being mobile-only).

Seventy per cent of people with a mobile and a fixed-line phone use their mobile to make some calls even when they are in the home; ten per cent of people with a fixed line at home never use it, claiming that they always use their mobile.

So, mobiles are starting to make an impact on landline calling but there is still a long way to go in terms of substitution. From a calling perspective there is sometimes a rationale for using a mobile instead of a landline, however most of us still need a landline to get a broadband product. Unless Ofcom mandates naked DSL in the UK, where it would be possible to order ADSL broadband without a phone line, most of us are stuck with a phone line so we might as well make some use of it. Currently, the only way to get broadband without a phone line is via Virgin Media, if you live in a cable area. Although mobile broadband is a great product when you’re out and about, I’m less convinced that it’s a replacement for landline broadband in terms of speed, coverage and download limits.

Another factor in the fixed mobile call substitution debate is mobile coverage. For many of us, in-building coverage is too flaky for mobile calling to be a reliable alternative, however this is where some of the mobile VoIP providers score because they use your broadband connection. DeFi Mobile and Truphone have been great ‘home’ mobile services for me because cellular mobile coverage isn’t great here.

Mobile VoIP players are well placed to exploit the international calling niche with rates that are invariably lower than landline providers. Truphone, DeFi Mobile, Rebtel and others each have a slightly different spin on where to make money from international calling and in some cases mobile VoIP providers are looking to replace landline calling completely. To get maximum value from DeFi Mobile’s fixed monthly tariff it makes sense to use it for all your calls. Plus, as a UK DeFi number is a landline number, the people you call will be able to return calls without paying a mobile ‘premium’.

So where next for mobile landline call substitution? The 3G mobile infrastructure sharing deals between 3 / T-Mobile and Vodafone / Orange will in theory lead to improved coverage, so extending the reach of the mobile operators. The niche mobile VoIP providers will continue to chip away at landline minutes, particularly for international calling. However, if we see the arrival of femtocells this year, accompanied by mobile tariffs aimed at taking landline business, then this could presage a step change in user behaviour and perhaps lead to much more call substitution. Femtocells could dramatically improve in-building mobile coverage and combined with naked DSL could be a winning combination. Now there’s an idea …

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Jonathan’s also at Sevendotzero.