Wireless pricing in competitive markets with at least one personal communications services operator on average is 18 percent lower than in markets with no PCS competitors, reported the Yankee Group.
More than 40 markets in North America have three broadband wireless voice providers and 10 markets have four service providers, said the Boston-based firm.
Among 30 U.S. markets studied-some with no PCS competitors and others with one or two PCS competitors-PCS pricing is on average 10 percent to 15 percent lower than cellular pricing. Cellular carriers in markets where PCS is operating have accelerated migration to digital services and in some cases are dropping prices.
PCS operators are not offering low monthly access fees (less than $15) with high per-minute rates (more than 75 cents), as have many cellular operators for their low use customers. Instead, PCS operators are aiming to keep average revenue per unit high, reported the Yankee Group. The most aggressive PCS pricing plans guarantee APRU of at least $40 and are not competitively priced at usage levels below 100 minutes per month.
In those 30 U.S. markets studied, the bundled price per minute for 100 minutes of use ranged from 35 cents to 71 cents. The average bundled price per minute at 100 minutes of use is 52 cents in markets without PCS service. In markets where PCS is operating, the average price per minute is 42 cents. The same principle applies at 250 minutes of use, said Yankee.
However, “other than some heightened promotional activity of late, PCS operators have been conservative in their pricing approach, and seem anxious to avoid a price war,” researchers noted.
The most radical PCS pricing is in Canada. Microcell Telecommunications Inc.’s Fido PCS service averages less than 10 cents per minute at the higher levels of use. The company is the only 1.9 GHz Canadian operator with service available today.
In response to PCS competition, many cellular carriers are emphasizing their coverage advantage. To underscore this, some carriers have dropped roaming rates and expanded home coverage areas.
The average cellular price premium compared to PCS has been cut in half from a year ago, said the Yankee Group.
The firm also found that pricing for digital services is inconsistent among cellular carriers. Customers of Southwestern Bell Mobile Systems and AirTouch Cellular are offered analog or digital at the same price, said the Yankee Group. AT&T Wireless Services Inc.’s digital plans average 10 percent below its analog calling plans, but still average 10 percent above PCS pricing in the applicable markets. Bell Atlantic Nynex Mobile dropped prices in conjunction with its launch of Code Division Multiple Access service in New York City, Philadelphia and Washington, D.C.
Since 1994, before PCS was introduced, wireless pricing in terms of bundled price per minute has dropped by 10 percent in markets with cellular only and by 25 percent in markets with PCS and cellular operating.
