Robinson-Humphrey Co. L.L.C’s latest quarterly survey of U.S. mobile phone prices indicates the pricing wars may be over.
The Atlanta-based company said pricing decreased since December just .8 percent to 1.6 percent on average, the smallest price decrease the company has seen since beginning the survey five quarters ago.
“The packaging of large `baskets’ of minutes continues to be a popular practice of the cellular and PCS providers, encouraging subscribers to use their phones more,” said the firm. “However, we note that many `double your minutes’ promotions seen in the fourth quarter have been discontinued. In many markets, we actually saw the price per plan go up as AT&T and Sprint PCS have discontinued `double your minutes’ and other promotions.”
Further, in a limited sample of wireless operators, Robinson-Humphrey said it discovered that fourth-quarter cash costs per subscriber declined about 12.2 percent from 1996.
“Overall, we will still see single-digit (price) declines through the year,” predicted Perry Walter, telecom analyst with Robinson-Humphrey. “As long as costs are declining faster than [average revenue per unit], we will continue to see cash-flow margins expand.”
The firm surveyed 36 markets in which personal communications services operators have begun offering service and found PCS pricing to be 7 percent to 12 percent lower than cellular pricing, depending on the plan. Robinson-Humphrey’s previous survey, which measured pricing in December, found that PCS pricing was 16.5 percent to 20.3 percent lower than cellular pricing.
In 24 of the 36 survey markets in which both A- and B-block PCS operators have launched service, Robinson-Humphrey said the average PCS discount to cellular was 5.9 percent, 13.6 percent and 12.2 percent, respectively for the low-end, mid-level and high-end pricing plans.
“In markets where we’re going to have a third PCS carrier, there will be higher declines as everyone adjusts to new pricing,” said Walter.
This was a the case in Philadelphia, the one market in the firm’s survey with a third PCS provider. Robinson-Humphrey said it saw PCS discounts to cellular range from 58.8 percent for the low-end plans to a 12.7 percent premium on the high-end plans. The price declines from the company’s December survey were 8.2 percent to 22.6 percent, significantly higher than the national average, noted Robinson-Humphrey.
The Midwest region showed the largest overall pricing decline, with the most significant declines in Detroit and Chicago (as much as 40.6 percent and 30.5 percent respectively), said the firm. Overall pricing in the Midwest dropped 1 percent to 9.2 percent. In the West, the firm saw 1.5 percent price increases on the high-end plans and price declines as high as 9.5 percent on mid-level plans. The Southeast region saw pricing decreases of 1.1 percent to 4.4 percent.
