Half of voice calls in Western Europe will be made from mobile phones by 2008, but mobile operators may lose out if they continue to slash prices to boost business, according to a report released by Analysys .

The research report spotlights the accelerating take-up of mobile devices to replace fixed lines, and estimates that at the current rate of change, the 50 per cent mark for mobile calling will be reached next year.

However, the report warns mobile operators that revenues may not automatically increase as a result, particularly if operators seek to accelerate the move from fixed to mobile by price cuts for voice calls.

"FMS [Fixed-Mobile Substitution] is generally seen as a threat for fixed operators and an opportunity for mobile operators," commented Dr Alastair Brydon, co-author of the report. However, this did automatically mean voice revenue gains for mobile operators.

"To avoid declines in voice (revenue), mobile operators need to achieve significant increases in usage to compensate for price cuts, and some operators are doing much better than others," Dr Brydon said.

Watching revenues

The Analysys report suggests not all mobile operators are benefiting from fixed to mobile substitution, pointing to examples of operators in Finland and Portugal, where mobile calls have increased significantly - to over 70 per cent in the case of Finland - but mobile revenues per user have fallen.

Spain, Austria and France, on the other hand, are highlighted by Analysys as markets where operators have avoided substantial price cuts while boosting mobile usage as a proportion of voice calls. The report suggests that smarter use of tariffs by operators - such as the use of lower home-zone pricing in Germany (and recently introduced in the UK by O2 ) - are the way to prevent revenue declines.