NEW YORK-Competition among wireless carriers has driven down per-minute use charges by 6 percent on average, with some carriers slashing prices by more than a third, according to a new study by Paul Kagan Associates Inc., Carmel, Calif.
A closer look at the most competitive markets for the first nine months of the year shows some wireless carriers launching aggressive first strikes in potential price wars. In Milwaukee, BellSouth Cellular Corp., doing business as Cellular One, chopped per-minute charges by 43 percent for very-high-use customers, said Richelle Elberg, a Kagan Associates analyst.
Omnipoint Communications Services Inc. effectively cut its rate for customers in the New York metropolitan area by 33 percent when it raised to 30 from five the number of `free’ minutes included in its monthly plan, she said.
With the overall 6 percent price reductions, the average price now ranges from 27 cents to 74 cents per minute for 100 minutes of use. For 300 minutes of use, the average per-minute charge is between 16 cents and 53 cents per minute. For 750 minutes of use, the blended cost-per-minute range is 13 cents to 47 cents.
Nationwide, Sprint Spectrum L.P.’s Sprint PCS service in St. Louis offers the lowest rate for 30 minutes of use at $17, or 57 cents per minute, for a `security user plan’. Security user plans, which generally cover up to a half-hour of use per month, are geared toward customers who want their wireless handsets primarily for emergency or other urgent calls.
At the high end, Los Angeles Cellular Telephone Co. charged 74 cents per minute for its 100-minutes-of-use plan. The plan offering the lowest price per 100 minutes is the GTE Mobilnet Inc. PCS service in Cincinnati, at 27 cents per minute.
Subscribers who are heavy users of wireless services paid AT&T Wireless Services Inc. in New York City $383.79, or slightly more than 38 cents per minute, for 1,000 minutes of use. By comparison, Bell Atlantic Mobile’s digital subscribers in Syracuse, N.Y., pay $59.95, or just under six cents per minute, for 1,000 minutes of use.
Cellular, personal communications services and enhanced specialized mobile radio providers all are trying to win the estimated 14 million new customers in 1997.
“Overall subscriber growth rates are much better this year than forecasted,” Elberg said. “Nextel has blown away all projections, the PCS players are doing well and cellular carriers also are adding significant numbers.”
In this expanding market, PCS operators are moving quickly into metropolitan areas, offering very attractive rates and significant long-term promotions to try to capture enough market share to turn a profit, according to Kagan Associates. In response, many cellular carriers are loading more minutes into their rate plans, slashing roaming rates and accelerating digital offerings.
“PCS operators, as well as Nextel with its ESMR web, are pushing the edge of the envelope, and cellular carriers must counter PCS moves or risk unacceptably high churn,” said Sharon Armbrust, vice president and senior analyst of Kagan Associates. “The good news is aggressive [advertising] campaigns and heated price competition are growing the pie for all.”
In the 43 competitive markets Kagan analyzed, PCS carriers were the lowest-cost providers in 29 for 100 minutes of use and in 27 for both 300 and 750 minutes of use. Cellular carriers were the least expensive in seven markets for 100 minutes of use, in six for 300 minutes of use and in 11 for 750 minutes of use. ESMR operators offered the cheapest prices in six markets for 100 minutes of use, in 10 markets for 300 minutes of use and in five markets for 750 minutes of use.
“Competitive Rates in Wireless Telecom” was based on a survey of the 43 markets in the largest U.S. metropolitan statistical areas where cellular, personal communications services and enhanced specialized mobile radio carriers are competing for customers. The top 100 MSAs comprise 162 million people, or 60 percent of the nation’s population. Excluded from the comparison calculation were Nextel Communications price plans with “Direct Connect” minutes.
The report, which is the first in a planned series of thrice-yearly surveys, includes current rate cards for every cellular, personal communications services and enhanced specialized mobile radio operator in the top 100 MSAs. It ranks each carrier by its lowest monthly bill for 30, 100, 300, 500, 750 and 1,000 minutes of use per month. It uses standard, non-promotional rate plans and assumes a 75-percent peak usage and 25-percent off-peak usage.
