The long-awaited wireless price wars have arrived and it appears that carriers big and small are well aware.
Verizon Wireless’ announcement last week to lower the price of its unlimited calling plans was probably the most high-profile drop. AT&T followed suit in a matter of hours.
Sprint and T-Mobile USA? Well, they chose to stay where they were at, as both T-Mo and Sprint have been cheaper all along. The two carriers spent the week firing off press releases that let the world know that not only were they cheaper, they’re still cheaper than their larger rivals.
So what are the specifics? As far as voice is concerned, which is the product of choice for discounting as operators realize data is the revenue generator of the future, the cuts are significant. Verizon Wireless slashed its individual unlimited voice to $69.99. Family unlimited voice at Verizon Wireless now goes for $89.99. AT&T followed suit with the same prices.
It looks like T-Mobile and Sprint tie with their $99.99 unlimited everything plans. These include texting, data and voice. Verizon Wireless and AT&T’s individual all-you-can-eat plans come in at $119.99.
U.S. Cellular announced that it, too, would be rolling out unlimited voice plans for its customers. The regional carrier will offer unlimited nationwide calling for $69.99 and a family nationwide unlimited plan for $119.99.
Even the smaller prepaid entities are getting involved. Just last week, MetroPCS announced new unlimited nationwide talk, text and Web service plans ranging from $40 to $60 per month.
Page Plus Cellular says it will lower the per-minute price of its prepaid calling cards. In a press release, the MVNO said that its rates had previously ranged between 6 cents and 12 cents per minute, depending on the denomination of the refill card. However, with more minutes being added to each card, the per-minute rate will now be 4 cents to 10 cents.
Chris Collins, mobile packaging and pricing analyst for the Yankee Group, says the current pricing war represents the third stage in the game for carriers.
“It seems as if there’s been this back and forth in terms of competing on device, which we saw this summer… Then it shifted to the network between AT&T and Verizon Wireless… and if neither of those worked or landed a knock-out punch, then you go to price, and that’s what we’re seeing here,” he says, adding that it’s all part of bigger trend toward consolidating the market with AT&T and Verizon emerging as one and two. “The question is, who comes out on top and how big of a share gain can they achieve?” Collins says.
A top down disturbance means just that and affects everyone in the food chain, which means even the smaller regional carriers need to at least match the big guy to compete. Collins says it’s more of the same tough road ahead for these carriers.
“They were in a tough spot 18 months ago, they’ll be in an even worse spot a year from now, but I don’t think that’s anything new. Yes, this makes it harder to compete, but a lot of people are still going to want a third or fourth option in their particular market… There is always going to be a demand for an alternative,” he says.
Regardless of how it all plays out, Collins says this is the beginning of a shake-up that has the potential to dramatically change the landscape of the industry. “This is what happens when a market matures and it could squeeze out everyone in the middle, quite frankly,” he says.
