A simple conundrum

One of the hot topics leading into the CTIA Wireless 2008 event earlier this month was the recent move by carriers to offer unlimited, flat-rate calling plans. While I didn’t have much time to discuss the move with industry analysts prior to the show, I made it a point to bring it up every chance I got at the event.
The big question seemed to be whether carriers would be able to attract a greater number of people moving up from a $70 or $80 per-month plan to the new $100 per-month plans, rather than high-end users moving down from $150 or even $200 per month plans. It seems like a gamble as those spending more than $100 per month will definitely make the switch, and those spending less might (but might not) make the switch. Aren’t the carriers playing Russian roulette with their main revenue source?
Many analysts I talked to at the show seemed to conclude the difference will be a wash; the extra $20 or $30 per month gained from the smaller percentage of a greater number of people moving up to the $100 plans will counteract the smaller segment of high-end users who will slide down to the $100 plans. Some even noted that the only reason high-end users might not make the move is if they think there is some sort of catch to the new plans. Skepticism about wireless pricing? That’s just crazy.
Industry observers did note that carriers have abdicated wireless voice service to a commodity. For carriers to continue to grow revenues, greater emphasis is being put on data.
After a slow start, this has proven to be a good move; nearly every carrier in the past few quarters has reported increased ARPU, with most attributing the increase to data services. Most of that is still coming from basic text messaging, but consumers are slowly beginning to understand the capabilities of their handsets. With that understanding, carriers need to be careful how they market and price their data offerings as simplified voice calling plans have given way to more complicated data pricing plans. Consumers could wrap their heads around calling minutes; getting them to understand the nuances of different data services could be a challenge that – if not mastered – will be felt on the bottom line.