6 Comments

Summary:

Checking out a new comparison chart on wireless pricing, I realized that we have a two-tiered level of competition when it comes to mobile plans (three if we count prepaid), and that voice has been utterly commoditized, which means data plans are going to stay pricey.

While flipping through reviews of the impacts of last week’s wireless pricing changes by AT&T and Verizon and comparisons of new cell phone pricing plans, I came across the handy little chart below, courtesy of a Deutsche Bank report out today. It made me realize that we have a two-tiered level of competition when it comes to mobile plans (three if we count prepaid), and voice has been utterly commoditized, which means data plans are going to stay pricey.

Here are a few other takeaways from this chart:

  1. For $100 you can get unlimited everything on T-Mo and Sprint. AT&T and Verizon will charge you $120. So if you live in an area where you can get coverage from T-Mo and Sprint, then there’s no reason to pay $240 extra a year.
  2. Voice is utterly commoditized, yet is still the biggest driver of a key carrier metric, average revenue per user or ARPU, (even if that voice ARPU is declining to around $37 or so today). To compensate for the decline in voice, data and SMS fees are going to have to get more and more expensive to keep carriers profiting. Alternatively, we’re going to have to use more data and get charged based on our usage, which is why Verizon and AT&T are adding mandatory data plans for more and more phones.

Thumbnail image courtesy of Flickr user Tracy O

  1. These numbers don’t mean much for heavy data users. I don’t care one bit about unlimited voice. I use less than 200 minutes of voice a month total. The ridiculously high unlimited everything plans just reinforce my lack of reliance on voice communication.

    The new lower prices for just the voice component of each plan seems like smoke a mirrors to get most users paying more per month when sms and data gets bundled in. I’m not dumb enough to fall for that.

    1. Ian, if you are a heavy data user on your phone, then you are somewhat stuck with paying a lot for voice to subsidize the unlimited data, but if you are using a data card, some of the prepaid providers have some good options. Although you are stuck with a limited area, so if you travel then you would be better off with a national provider. It’s enough to boggle the mind.

  2. i have been unable to figure out if the mandatory data plans also apply if you bring your own phone or only if you buy a new one with two year contract. if the latter this may actually help drive the market for unlocked/unsubsidized phones.

    for many people wifi only for data would work out just fine.

    1. Tom,
      For Verizon, I know that even bring-your-own phones trigger the mandatory data plans.
      For Verizon, it’s always one apparent step forward two actual steps backwards.

  3. Stacey
    You seem to know your stuff
    I have been looking at the back haul business specificly FiberTower. With the increase in use of phones for data transmition shouldn’t these guys be the biggest beneficiaries?
    Thanks Mike

  4. Q4 Wireless Scorecard: It’s Good to Be the King – GigaOM Monday, March 1, 2010

    [...] can continue to add subscribers this quarter after rolling out new price plans that effectively create two tiers of competition among postpaid [...]

Comments have been disabled for this post