Only 24 more shopping days left before Christmas, but personal communications services pricing promotions don’t seem to look much different from those offered during the last few months.
Though enticing price packages remain, like 400 minutes for $40, the deeply discounted PCS pricing plans, like $75 for 1,500 minutes, for the most part faded away last quarter. PCS carriers generally don’t want to drop their rates below the 10-cents-per-minute mark.
“It’s important for PCS carriers to increase awareness of who they are in markets. That’s part of the traditional fourth-quarter push,” said Mark Lowenstein, director of wireless mobile communications for the Yankee Group in Boston. “I don’t think they want to get caught up in the usual way [the fourth quarter] has developed-lots of free promotions … They are not anxious to gain subscribers by virtue of break-neck pricing. They want to keep [average revenue per unit] up there. We’ll see a value pricing scenario.”
“What carriers are trying to do is increase the number of minutes in packages but keep ARPU at a fairly level amount. That’s the tone of a lot of strategies,” said Perry Walter, vice president and telecommunications analyst with The Robinson-Humphrey Co. Inc. in Atlanta. “These buckets of minutes sound like cheap minutes, but people aren’t using them all. It’s like giving away something that doesn’t cost you anything.”
Nationwide contender Sprint Spectrum L.P. last quarter scrapped its promotional plans that included 1,500 minutes for $75 to offer new dime-a-minute plans, which include $400 minutes for $40 or 600 minutes for $60 per month. New plans unveiled for the holidays reflect the same dime-a-minute concept with slightly higher rates for one package. The plans include $30 per month for 180 minutes, $50 for 400 minutes and $80 for 800 minutes. Also, some of the plans incorporate free home-rate calling in any Sprint PCS market. Customers previously had to pay about $5 for the service.
PrimeCo Personal Communications L.P. said it dropped its rates slightly in bundled packages to average about 10-cents-per-minute in its 11 markets.
“We’re trying to keep our bundles in the $40 price range,” said Darryl Newman, director of national retail for PrimeCo. “This allows people who are new to the market to not have to invest in huge monthly outlays.”
Powertel Inc. is sticking with its current rates throughout its 12-Southeastern state region. After offering deeply discounted pricing plans like $10 for 60 minutes this summer, the company Oct. 1 introduced permanent bucket pricing plans that start at $20 per month for 100 minutes. This type of pricing, Powertel said, will systematically drive up the value proposition of the company’s service. New customers will be attracted to the $20 plan, grow their minutes of use and migrate to the next level.
“There is a strong value proposition there,” said Allen Smith, Powertel’s president and chief executive officer. “We’ll increase advertising and promotions (during the holidays) for these rate plans.”
Omnipoint Communications Services doesn’t offer bundled minutes, but is knocking $10 off the monthly access charge for three months. Standard rates are 49 cents-per-minute for peak airtime and 25 cents for off-peak time. Airtime charges decrease the more the customer uses the service.
“We don’t try to wow people with bundled minutes,” said Jim Robertillo, general manager of Omnipoint’s New York market. “It takes the confusion out and tells the customer that they don’t have to overcommit to minutes they don’t use. They only pay for the exact number of minutes.”
A Robinson-Humphrey survey indicated that PCS prices remained at a discount of between 3.5 percent and 14.4 percent to cellular prices during the third quarter. This difference may prompt cellular carriers to become more aggressive than PCS carriers during the traditional fourth-quarter push.
Investment firm Smith Barney Inc. said the PCS industry is closing in fast on the cellular industry. The firm has estimated that PCS net additions during the third quarter were nearly 40 percent of the total mobile phone industry’s net adds. It also estimated that Sprint PCS added 160,000 to 210,000 subscribers during the third quarter, which contributed to the entire industry’s net addition share.
AT&T Wireless Services Inc., the largest cellular carrier in the nation, recorded third-quarter revenues below Prudential Securities’ estimate. The carrier’s wireless revenue growth was 10.4 percent compared with Prudential’s estimate of 14 percent.
“The introduction of new PCS competitors is having a negative impact on AT&T’s wireless subscriber growth,” concluded Prudential.
