Following a rather uneventful holiday season in which wireless operators favored handset subsidies over aggressive rate-plan changes, the new year has seen numerous adjustments. Industry observers note that the changes could reflect operational trends within the operators as well as showing that despite fewer competitors due to consolidation, the wireless industry remains as competitive as ever.
“I don’t know if I would read too much into the changes, but they definitely show that carriers are remaining competitive in their pricing plans,” said RBC Capital Markets telecommunications industry analyst Jonathan Atkin.
Verizon Wireless, which has historically relied on its claims of superior network quality to entice consumers instead of cut-rate pricing plans, made slight adjustments to its on-network America’s Choice plans, increasing anytime minutes on several of its rate plans as well as eliminating a mid-priced option.
The changes ranged from the addition of 50 anytime minutes to the carrier’s entry-level offering-bringing the offer to 450 anytime minutes for $40 per month-to an additional 500 anytime minutes on its $150, $200 and $300 pricing plans, increasing those plans to 3,000, 4,000, and 6,000 anytime minutes respectively. Verizon Wireless also eliminated its previously offered $50 for 500 anytime minute rate plan.
The additional minutes cut the price per minute on the affected plans by around 1 cent per minute, making Verizon Wireless more cost competitive.
Verizon Wireless also cut its add-a-line pricing from $20 per line to $10 on its FamilyShare plans while at the same time reducing the plans’ minutes, which Atkin said would likely result in “greater marketing appeal” and “only a modest reduction on the effective per-minute rate.”
The rate-plan changes follow Verizon Wireless’ announcement earlier this month that it plans to launch its wireless data Vcast service across its ever-expanding CDMA2000 1x EV-DO network. The Vcast service includes streaming content and access to the carrier’s WAP-based Mobile Web 2.0 service for $15 per month. Verizon Wireless previously charged customers $5 per month for Web access.
Industry research firm Current Analysis noted the Vcast plan matches Sprint PCS’ price for access to its 1x-based Vision service, which has helped propel Sprint PCS to a leadership position in the adoption of wireless data services.
While Verizon Wireless was targeting Sprint PCS’ data offerings, Sprint PCS focused its recent pricing efforts on the expansion of its Fair & Flexible plans that provide overage protection to users, and according to a Sprint PCS spokeswoman, are being selected by a majority of new customers.
The expanded offering includes the addition of higher-end tiers beginning at $100 per month for 2,500 anytime minutes on individual plans or $125 per month for two lines. The plans will join previous F&F offerings that included $35 for 300 anytime minutes and $50 for 700 anytime minutes for individual users and $70 for 800 anytime minutes shared between two handsets.
Sprint PCS also modified its lower-tiered F&F plans by cutting the overage pricing on the $35 plan from 10 cents per minute to 5 cents per minute and lowered the maximum flat-rate bucket addition on its $50 plan from 2,000 minutes to 1,700 minutes.
RBC’s Atkin noted the overage changes slightly “tightened” the F&F pricing, but that he did not expect the changes to significantly affect adoption of the plans.
Analysts have noted that the F&F offering has garnered increased traction from new customers since it was launched last year and has helped insulate Sprint PCS from the marketing effects of Cingular Wireless L.L.C.’s acquisition of AT&T Wireless Services Inc.
T-Mobile USA Inc., which has traditionally been the lowest-priced carrier, followed up its pre-holiday-launched three-day weekend promotion with a pair of Get More 1000 offers. The new plans provide 1,000 anytime minutes and unlimited weekend calling for $40 per month or with the addition of unlimited weeknight calling for $46 per month. The carrier previously offered the same plan for $60 per month as its Get More Plus offering.
One of the more aggressive changes was initiated by Nextel Communications Inc., which added a local plan providing unlimited local cellular and local Direct Connect calling for $100 per month. The plan does charge 20 cents per minute for long-distance calls, and customers can add Nationwide and International Direct Connect for $20 per month. The local plans had previously topped out at $66 per month for 1,250 anytime minutes and unlimited night and weekend and Direct Connect minutes.
