February 21, 2008

NOTHING COSTS MORE...:

Say Hello to Unlimited Minutes: Verizon Wireless offers unlimited calls for $100 a month, others follow suit, and Wall Street shudders at the prospect of a price war (Olga Kharif, 2/21/08, Business Week)

As a communications consultant, Carlyn Taylor knows her way around a wireless bill. So when her mobile-phone provider, Verizon Wireless, began offering unlimited calling for $100 a month, it didn't take Taylor long to figure out that the new plan would have sliced more than $500 from her bills in the past six months.

Taylor quickly made the switch, and she reckons that a slew of wireless consumers may soon do the same math. The Feb. 19 price change by Verizon Wireless was swiftly matched by AT&T Mobility (T) and T-Mobile USA. In all, 5% to 15% of the combined customer base of these three of the four largest U.S. cell-phone service providers will probably save by converting to the all-you-can-talk calling plans, says Taylor, who heads the communications and media practice at consultancy FTI (FCN).

The moves fueled concern that the U.S. mobile-phone industry would become locked in a price war and sent mobile-phone company stocks lower. Indeed, service providers could lose 25% to 40% of the revenue from some of their most lucrative customers, and more attractive wireless plans will probably entice consumers to disconnect traditional phone services, Taylor says: "There's no question they are trying to lure people away from landlines."

Posted by Orrin Judd at February 21, 2008 7:18 AM
Comments

"Indeed, service providers could lose 25% to 40% of the revenue from some of their most lucrative customers,"

Proof that Wall Street is continually behind my industry's times. All the cell-phone providers can easily make that up with all the text-message, pictures, video, and other internet-based uses for cell phones. The current charges for those are out of sight.

Posted by: Brad S at February 21, 2008 8:04 AM
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