Verizon Wireless is ‘following in the footsteps of its rivals’
The U.S. wireless market is currently going through a very competitive streak as carriers look to take customers from rivals with an endless parade of device promotions, price cuts, aggressive marketing and other tactics. According to one industry analyst, the carrier price wars are a sign of a weak U.S. economy.
Quinn Foley of Seeking Alpha reached that conclusion on the heels of Verizon Wireless revamping its data price structure by raising overall prices, but decreasing the per-gigabyte price of data.
From a July 13 research note: “Verizon recently decided to raise prices again, but this time it does not reflect strong bargaining power over customers. [Verizon’s] competitive position has been compromised, as T-Mobile and Sprint have become more aggressive in their offerings. More and more customers consider the cheaper data plans of smaller carriers to be better value for money, and this has important implications about the health of the U.S. economy.”
Foley said Verizon Wireless is “scrambling to improve its value proposition and protect market share.”
In addition to the changes to data plans, Verizon Wireless also announced a rollover data program, as well as a “safety mode” service meant to ensure users don’t go over their allotment and face additional fees.
Foley points out that T-Mobile US and AT&T Mobility offer similar services and have for some time. “[Verizon] is now following in the footsteps of its rivals, a tactic that seemed unlikely for the industry leader not long ago,” Foley wrote.
As to the economy, Foley writes that millennials are buying the bulk of new wireless service plans, but are simultaneously dealing with “mountains of student loan debt, poor job prospects” and other factors. “We think these finds have some important implications about the health of the U.S. economy and the outlook for Verizon going forward. The reason why T-Mobile and Sprint have been so successful in their strategies is because the economy is weak and consumers have become more sensitive to price. Until conditions in the labor market improve, customers will remain highly sensitive to price,” Foley noted.
