Let the battle for the high-end mobile phone users begin.
Sprint Spectrum L.P. late last week introduced three new all-inclusive national pricing plans that eliminate roaming and long-distance fees on its digital network nationwide. The plans charge $70 per month for 600 minutes, $100 per month for 1,000 minutes and $150 for 1,500 minutes.
Sprint PCS is the latest entrant into the new marketing war for the high-end user. Nextel Communications Inc. was the first to eliminate roaming and long-distance charges nationwide without charging extra fees. Nationwide operator AT&T Wireless Services Inc. followed suit in May by introducing three aggressive high-end pricing plans. Bell Atlantic Mobile last month introduced new East-Coast calling plans that eliminate long-distance and roaming charges within the company’s footprint. It introduced one high-end plan that offers inclusive pricing nationwide. AirTouch Communications Inc. last week introduced its National Home Rate pricing for new and existing Southern California customers. Cellular One has implementing home rates in some of its markets as well.
Analysts said in May that AT&T Wireless’ move would put pressure on the carrier’s competition, primarily Sprint PCS, AT&T Wireless’ national competitor that is building out a nationwide personal communications services network based on Code Division Multiple Access technology. Sprint already had set the bar within the last two years in the mobile phone industry by offering Home Rate USA and Toll-Free USA plans, analysts said.
But Sprint PCS does not include analog roaming in the new pricing plans. It charges 69 cents per minute and normal long-distance charges when customers roam onto an analog network. Sprint PCS said analog roaming is not a necessary component.
“Our network is different than our competition’s,” said Tom Murphy, director of media relations with Sprint PCS. “We’re in 163 markets … We’ll be launching in a number of markets before the end of the year, and our affiliate markets are just starting … We don’t have a coverage disadvantage, and we’re not requiring contracts.”
Prudential Securities in New York in a recent industry update pointed out that Sprint PCS’ network covers less than half of the U.S. population, and Prudential estimates it may take up to two years before Sprint PCS builds coverage to another 40 percent.
“To the other half of the population, these plans do not apply,” said Chris Larsen, wireless analyst with Prudential. “There is a significant number of people that travel outside of that. With the AT&T One Rate, there are no asterisks. Your bill is going to be $90.”
Richard Siber, director of Andersen Consulting’s wireless practice in Boston, said only a small group of customers need 100 percent roaming.
“You don’t have to be everything to everyone,” he said. “How many people need to use their phone everywhere? When you look at roaming, there’s a finite group that makes the majority of roaming traffic … From a Sprint perspective, analog goes away as the network matures.”
AT&T Wireless President and Chief Executive Officer Dan Hesse said AT&T took into consideration what pricing plans would be difficult for other carriers to match before it introduced its One Rate plan. Most of AT&T Wireless’ roaming is on its own network, he said. And the company is able to use intelligent roaming and negotiate aggressive roaming rates with other carriers because most need to roam on AT&T Wireless’ network as well.
Larsen estimates Sprint PCS’ analog roaming costs run around 55 cents per minute. AT&T Wireless’, he believes, are 35 cents per minute.
“If you’re AT&T, you have some leverage to get those rates down,” said Larsen. “Carriers don’t have the incentive to roam on Sprint’s network.”
Other regional carriers like AirTouch aggressively are renegotiating contracts with roaming partners. AirTouch said its National Home Rate Pricing is a result of intensive efforts to renegotiate contracts with dozens of roaming partners throughout the United States-from carriers that service big cities to those that service rural regions.
“By reducing our costs, we can pass along those savings in the form of lower rates for our customers,” said Nancy Hobbs, AirTouch’s vice president and general manager.
PCS operator PrimeCo Personal Communications L.P. said it has expanded its digital and analog coverage areas through new roaming agreements with AT&T Wireless, United States Cellular Corp. and other wireless carriers. The recent agreements build on existing roaming coverage provided through its owners Bell Atlantic and AirTouch along with GTE Wireless Inc. The carrier is looking to introduce aggressive nationwide offers once it receives tri-mode handsets.
