Wireless operators seem to be reacting to AT&T Wireless Services Inc.’s Digital One Rate plan, but have fallen short of offering plans that mimic AT&T’s.
As reported by RCR Aug. 31, Bell Atlantic Mobile announced last week single rate plans. Only one pricing plan-which offers 1,600 minutes for $160 per month-eliminates roaming and long-distance charges nationwide. The other three, called SingleRate East, eliminate roaming and long-distance fees within BAM’s East Coast footprint, which covers 116,000 square miles. The three pricing options include $40 per month for 60 to 100 minutes (varies by region), $60 for 150 to 250 minutes and $100 for 800 minutes. Existing customers can switch to the new plans without purchasing a new handset, and new customers do not have to purchase a specific digital handset to sign up for the new packages.
BAM said it designed the plans around customers’ calling patterns as 60 percent to 70 percent of its customers who roam do so within its East Coast footprint.
“I’m convinced that these plans will generate positive effects that include lower churn rate at the high end of the customer base, higher subscriber growth … and a greater proportion of mid- and high-tier customers,” said Dennis Strigl, group vice president and chief executive officer of Bell Atlantic Global Wireless.
Wall Street analyst firm Toronto Dominion in New York said BAM’s new pricing plans reflect cellular carriers’ willingness to battle it out for high-end users.
“The strength of this commitment can be seen from the nearly 50 percent reduction in cellular rates on high-level usage plans over the past six months,” said the firm.
But carriers aren’t going as far as AT&T’s Digital One Rate plan, which offers three high-end plans that eliminate roaming and long-distance charges nationwide. Omnipoint Communications Inc. unveiled new bucket pricing plans earlier this month that eliminate long-distance charges if customers pay an extra fee. The personal communications services carrier also reduced its roaming rates to 50 cents. Sprint PCS is offering a temporary pricing promotion that allows customers to pay $50 for 500 minutes and includes long-distance and roaming within its digital network only.
Prudential Securities in New York noted that eliminating roaming charges is the more expensive piece of one-rate plans, which may be why carriers are reluctant to follow AT&T’s steps. Prudential estimates carriers pay each other 35 cents to 55 cents per minute for roaming minutes.
“Not only will a carrier that implements such a no-roaming plan lose the roaming revenue (while still paying the relatively high costs to the other carriers), but usage may also go up. This price elasticity was shown to be the case by 360
