Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
It would appear that the current price war inundating the domestic carrier space is reaching some sort of critical level not seen in years. And, it’s good to have it back.
You see, price wars were common years ago when there we six “nationwide” operators clamoring for attention and a still vast un-tapped pool of consumers that had still not tied their lives to a mobile device. Most of the battles were based on calling minute buckets and text messaging allotments, with all of that data-hullaballoo of today something that was not ready to be tackled.
Making those “old” price wars even better were the multitude of rate plans carriers offered up, including “regional” and “local” plans to go along with the new-to-the-market “nationwide” plans. The beauty of this bevy of choices was that it was total chaos for consumers.
“What the heck is the difference between regional and local, and when do I know when I have crossed that line?” Even better, customers couldn’t “port” their phone number to a new carrier, so if they were so fed up that they just had to get away, they left their mobile number behind. They really were good times.
Not today though, where voice calling and text messaging are a given, and nationwide calling plans are almost in sync with true nationwide calling ability. These days it’s all about contract or no-contract, how much data until a customer gets throttled and LTE coverage maps.
This week alone has seen AT&T Mobility and Sprint both be-dazzle rate plans for their respective Aio Wireless and Boost Mobile no-contract brands, while AT&T Mobility also slashed pricing on its now no-contract Mobile Share offer to further entice multi-line accounts. The Aio Wireless and Boost Mobile changes highlight the increased pressure across all no-contract offerings, while AT&T Mobility’s move with Mobile Share shows that multi-line accounts are still targets for “locking in” consumers.
More hilariously – and already covered – are the moves by T-Mobile US and AT&T Mobility to pay customers to switch, though unfortunately AT&T Mobility’s play was short lived.
Even Verizon Wireless, which has recently mentioned, remained blissfully above the fray in these matters, has made some effort to entice value-hungry consumers. After having thrown all of its marketing eggs into its Share Everything plans, the carrier has thrown a bone to simpler consumers with single-line offerings that provide for unlimited voice calling, messaging and a bucket of data beginning at $45 per month. A contract is required, but it does provide smartphone access to the carrier’s postpaid-only LTE netowrk. There are also stories suggesting the carrier is willing to bend a bit on pricing should you be a “loyal” customer and say the right combination of: “please,” “pretty please” and “pretty, pretty please.”
(Verizon Wireless this week did offer up a free iPhone 4S for anyone willing to sign a new two-year contract. Do people still sign contracts?)
These sorts of moves used to cause panic among financial analysts as wireless carriers were hit-or-miss regarding quarterly profitability. Slicing rate plans typically squeezed margins on relatively small customer bases that were needed to pay off 2G and 3G network deployments and spectrum purchases. This pressure eventually led to consolidation that was fortunate for some (AT&T/Cingular and Verizon Wireless/Alltel), while difficult for others (Sprint and Nextel).
Once this round of consolidation dies down, frantic pricing changes became a thing of the past. We were left with basically a tiered system where the newly strengthened AT&T Mobility and Verizon Wireless mirrored each other in raising prices, while the battered T-Mobile USA and Sprint Nextel floundered between trying to appear as competent rivals to larger players and battling against smaller rivals for lower quality customers.
Today, however, swelling customer bases and robust consumer spending has turned financial concerns for (most) carriers away from just paying the bills to “how do we count all this money?”
Verizon Wireless and AT&T Mobility have become cash cows for their parent companies, while T-Mobile US is the “Comeback Kid” and Sprint is at least doing better than it once was. That financial “security” will also likely limit the need and support for additional consolidation among larger carriers, though let’s hope that at least rumors of such hook-ups remain a daily occurrence (see below).
I am also hoping that with most carriers on at least some semblance of financial security, these schizophrenic rate plan moves will continue. Sure, such moves are not likely to have the “make-or-break” effect of past pricing wars, but they at least they allow us to look back wistfully at a bygone day when sanity was questioned and financial analysts were nervous.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–Good luck to those trying to make a buck in the stock market on the backs of Sprint and T-Mobile US. A day did not seem to go by this week where I was not getting a stock alert notifying me that Sprint and T-Mobile US’ stock prices were falling due to “concerns” that a potential deal between them was unlikely, or that those prices were surging on “news” that a deal was imminent.
I think I have made my selfish stance on this whole deal pretty clear, but for sanity of investors out there, let’s make up our minds already.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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