WASHINGTON-Although a broadband wireless pricing survey performed by BT Alex. Brown Research came up with no definitive trend-all up, all down or all the same-it did find that high-end subscribers have been ratcheting down their minutes of use, that personal communications services carriers include the most bundled minutes in a plan and that PCS introductory prices are the same or below those of their cellular counterparts.
Analysts Brian Coleman and Jonathan Adkin compared the rates offered by PCS, digital cellular and digital specialized mobile radio (Nextel) carriers in 10 markets nationwide-Tulsa, Houston, Dallas, Denver, Pittsburgh, Portland, Salt Lake City, Seattle, Tampa and Philadelphia-and any price fluctuations in those plans between July and November of this year.
“With a few notable exceptions, we observed absolute rate declines since July for both cellular and PCS carriers in most markets,” they wrote. “The greatest decline we observed was in Tampa, where a hypothetical 400 minutes/month new cellular user can expect to pay on average approximately 40-percent less than in July.” PCS subscribers in Denver, Portland and Philadelphia and cellular users in Dallas are not so lucky. According to Coleman and Adkin, high-usage customers in those markets are paying 80-percent more than they did in July, “fueled primarily by apparent rate increases by AT&T Wireless.”
PCS carriers in two-thirds of the markets surveyed are “taking advantage of their greater digital capacity” and lack of analog customers and networks to bundle more minutes into their higher-usage plans, the analysts found. “For example, in Pittsburgh, Aerial … offers 1,000 minutes in its $50/month package, while AT&T Wireless includes 500 minutes in its higher-priced $99/month package,” they wrote. However, in other markets, cellular subscribers get more for their money as carriers try to keep their best customers. In Houston, GTE and Houston Cellular offer some 1,500 free minutes in their $100 packages, while PCS providers PrimeCo and Aerial offer 1,000 and 500 minutes, respectively.
Coleman and Adkin also found that PCS carriers in all markets surveyed had a lower introductory rate for service over cellular, with discounts in seven markets averaging 15 percent to 20 percent. Portland and Philadelphia, two markets with lower discounts-three percent to six percent-“are tied with Tulsa for having the highest degree of digital competition, with three PCS operators, Nextel and two digital cellular competitors,” the analysts wrote. “Surprisingly, in Tulsa, PCS carriers offer on average a 40-percent discount relative to cellular at introductory usage levels, even though the cellular operators actually offer 13-percent lower rates than PCS at the 400 minutes/month level.”
Fewer cellular and PCS subscribers in the 10-market area are roaming because “home” calling areas are becoming so large; however, minutes of use are up because no roaming rates are charged. Cellular carriers in particular are using wide-area coverage to differentiate themselves from their PCS competitors. In some areas, digital wireless per-minute rates are competitive with landline rates, encouraging subscribers to use their mobile phones instead of wireline units.
BT Alex. Brown Research found that ESMR Nextel subscribers, while mainly business users, “assume exactly the same call behavior as for our PCS and digital cellular calculations,” even though only one-third of its customer base is interconnected to the public switched network. Nextel’s per-minute rates are within one to two cents of cellular carriers; in Seattle, Salt Lake City, Dallas and Houston, Nextel’s high-end rates are lower. Introductory ESMR rates, however, “are consistently higher than those of either cellular or PCS,” Coleman and Adkin wrote. “This is not surprising, given Nextel’s focus on mobile professionals rather than consumers.”
