NEW YORK-A new pricing study released by Bear, Stearns & Co. Inc. indicates U.S. mobile phone carriers battled it out for high-end wireless customers in 1998.
Prices did not fall as quickly in 1998 as they did the previous year, indicated David Freedman, wireless analyst with Bear Stearns in New York.
“For plans less than 400 minutes per month, there was almost no change in the affected price per minute from 1997 to 1998,” he said. Above 400 minutes, however, PCS carriers decreased their rates by about 10 percent, while cellular operators-which found they needed to make a competitive strike as PCS carriers improved their footprints-lowered tariffs by approximately 20 percent at all levels of usage, but only 10 percent to 15 percent for plans below 400 minutes. And for plans offering about 600 minutes per month, the survey detected a decrease in price of more than 20 percent.
Freeman concluded that demand for wireless service is highly elastic at new pricing levels. This is evidenced by cellular operators’ slower decreases in average revenue per unit compared with price declines.
