Robinson-Humphrey Co. L.L.C.’s third-quarter survey of U.S. mobile phone pricing indicates pricing overall has increased as carriers move from offering local calling plans to introducing one-rate plans that eliminate roaming and long-distance fees.
One-rate plans “give the effect of increasing local pricing,” said Perry Walter, wireless analyst with Robinson-Humphrey. “Our survey results show that many carriers are taking advantage of the shift to this new battleground to discontinue or limit promotional pricing for local service pricing, the type of plans that we believe appeal to over 90 percent of wireless users.”
AT&T Wireless Services Inc., Sprint PCS, Bell Atlantic Mobile and AirTouch Communications Inc. are among the personal communications services and cellular companies that have introduced one-rate pricing.
Sprint PCS, by introducing its single-rate plans, raised the high-end prices considerably in most markets, the study found. Its new 1,000-minute plan became the only offering on the high end, and prices increased up to 72.5 percent in places like Milwaukee and Des Moines, Iowa. The same trend occurred slightly with Sprint PCS’ mid-level plans as prices increased in 17 of its markets, with some pricing changes moving as high as 66.6 percent from the firm’s previous survey for the second quarter.
AT&T Wireless’ pricing overall increased as the carrier eliminated or lowered some bundled-minute promotions in markets and heavily pushed its Digital One Rate plan.
Bell Atlantic Mobile’s pricing, Robinson-Humphrey found, increased considerably in the major Northeastern markets because it ended free off-peak minutes in New York and Philadelphia, as well as ended double-minute promotions in Pittsburgh. Only customers in New York can continue to purchase the unlimited off-peak plan for $10. The firm said BAM’s moves have resulted in its high-end plan prices rising an average of 42 percent, with some of the other plans increasing significantly in price as well.
Robinson-Humphrey is forecasting third-quarter declines in cash costs per subscriber will average 4 percent. Cash costs continue to decline faster than pricing, which is up 6.1 percent, but the figures do not include the effects of new one-rate plans. Cash costs associated with one-rate type plans remain to be seen, though most carriers, with the exception of AT&T Wireless and AirTouch, are not including or are limiting off-network roaming so they don’t incur large expenses associated with paying roaming fees to other carriers.
“We see that the carriers have left themselves plenty of room for margin expansion,” said Walter. “Some of this margin, however, will likely be eroded by the new plans for roaming and long distance.”
The firm’s pricing survey also found less discounting by PCS carriers in most regions, compared with the previous quarter’s survey. The nationwide average for mid-level plans showed PCS at a 0.8-percent premium to cellular, said the firm. In the 25 markets in which both A-block and B-block PCS operators are in service, the average PCS discount to cellular was 8.6 percent, 7.0 percent and 6.7 percent, respectively, for the low-end, mid-level and high-end plans.
