Following a robust holiday season that witnessed less pricing competition from nationwide operators, carriers waited the customary month into the new year before putting away their limited holiday promotions and rolling out new rates that are expected to set the stage for the rest of the year.
“The carriers seem to make these changes every year,” noted Yankee Group wireless service analyst Adam Guy. “They increase the incentives during the holiday season and then make adjustments to counter those effects a month or two into the new year.”
Most of the changes over the past week involved carriers exchanging holiday promotions for more on-network friendly offers designed to draw groups of customers to their networks and keep them from straying off their respective networks.
Verizon Wireless, Cingular Wireless L.L.C. and AT&T Wireless Services Inc. all increased customer incentives to place calls within their networks with additional on-network calling minutes. Verizon Wireless increased its previously offered 1,000 mobile-to-mobile minutes offering to unlimited “in-network calling” on its America’s Choice plans; Cingular is allowing GSM Nation customers to upgrade the standard 1,000 mobile-to-mobile minutes to 5,000 minutes for an additional $20 per month; and AWS said all customers signing a two-year contract would receive unlimited on-network calling.
The unlimited offers match Sprint PCS, which has offered unlimited on-network calling on its Free & Clear Nationwide plans for an additional $5 per month.
“People may not need more than 1,000 minutes per month, but they will see the unlimited offer and automatically think it’s a better deal,” Guy said.
While the unlimited offers could lead to increased network congestion, the financial benefits of keeping calls on-network should outweigh the impact, Guy added.
Beyond the increased on-network calling offers, carriers also tweaked their regular rate plans and in some cases eliminated holiday promotions.
Cingular has been the most aggressive by decreasing the available minutes on entry-level plans, expanding its mid-tier offerings and increasing the value for high-end users on its GSM Nation on-network plans. The entry-level changes include dropping the anytime minutes available on its $40 per month plan from 500 minutes to 450 minutes, and on its $50 GSM Nation plan from 700 minutes to 600 minutes. The carrier also decreased the night and weekend minutes on its $30 per month plan from 5,000 minutes to 1,000 minutes.
Further up the pricing scale, Cingular replaced its previously offered $70 per month for 1,000 anytime minute plan with a pair of offerings including a $60 per month for 850 anytime minutes plan and $80 for 1,250 anytime minutes plan. Cingular also increased the anytime minutes on rate plans beginning at $100 per month along with reductions in overage and added a new $250 per month plan that includes 4,500 anytime minutes and seven cents per minute for overage.
Cingular also eliminated its 500-bonus-rollover-minutes holiday promotion and increased the cost of adding additional lines to an account from $10 to $20 per month, which is the same amount Verizon Wireless and Sprint PCS charge. RBC Capital Markets telecommunications industry analyst Jonathan Atkin noted the changes should help Cingular reverse its recent average revenue per user declines as well as offset reductions in overage.
AWS also eliminated its 1,000-bonus-minute holiday promotion, which provided an extra 250 anytime minutes per month for the first four month as well as its three months of free add-a-line option, but continues to allow customers to add additional lines to rate plans for $10 per month. AWS also continues to provide between 50 and 100 bonus minutes on its national plans beginning at $40 per month on its Web site.
After announcing it would not charge customers local number portability fees leading up to the mandate’s implementation last November, Verizon Wireless has begun charging customers 45 cents per month for regulatory mandates.
Nextel Communications Inc., which has traditionally stayed above the consumer-centric seasonal pricing changes, also altered its pricing plans following the holiday season.
The carrier eliminated its National Instant Connect plans, which provided 500 anytime minutes for $50 per month or 1,000 minutes for $70 per month as well as unlimited nights and weekends, and unlimited Nationwide Direct Connect, and is now offering National Value Plans that begin at $40 per month for 500 anytime minutes, unlimited night and weekend minutes and 100 Direct Connect minutes. The anytime minutes on the value plans ramp up quickly at the $100 price point providing 2,000 anytime minutes and rivaling the price per minute of its more consumer-friendly rivals.
Nextel also introduced an entry-level National Free Incoming Plan, which provides 250 anytime minutes, unlimited incoming minutes, unlimited night and weekend and unlimited Nationwide Direct Connect for $50 per month.
Sprint PCS and T-Mobile USA Inc. did not make any changes to their rate plans.
