Permanently Lower U.S. Mobile Prices Among Likely Outcomes of Current Mobile Price War

When all is said and done, when the current marketing mobile marketing war has ended, and when some major acquisitions have been approved or denied, when the U.S. cable industry makes its first “owned facilities” entry into the mobile business, what will market structure look like?


Even if one assumes regulatory authorities will prevail, and that the U.S. market features leadership by at least four providers, who will those leaders be, and how will revenue models have changed?


At a broad level, if one assumes the rationale for three leading providers instead of four or five is that markets would stabilize and feature more stable and attractive financial returns, the U.S. mobile market seems destined for more instability.


At a minimum, both Dish Network and Comcast must enter the market--Dish Network according to a fixed schedule set by the Federal Communications Commission, and Comcast at a time of its own choosing.


Whether other actors, including but not limited to Illiad, will be significant elements also remains to be seen.


Most would assume AT&T Mobility and Verizon Wireless will remain the leading providers, longer term.


Beyond that, much remains in flux. Some believe Sprint will be a third name among the leaders of the U.S. market. T-Mobile US assets, most assume also will be part of the story, even if T-Mobile US as a brand, or T-Mobile US under current ownership,  might not be a future reality.


If Dish Network eventually acquires T-Mobile US, then Comcast enters as a fifth provider.


The issue then is how market structure changes, as five providers would be even more unstable than the current market.


In addition to possible changes in the names of the players, a permanent lower level of revenue per account is possible.


In Singapore, for example, a price war among gigabit fixed network services has broken out.
M1 launched a gigabit access promotion where initial prices are S$49 ($39) per month, a price that apparently includes a 1Gbyte usage bucket for M1 mobile broadband service.


M1 had been charging S$399 for the service a year ago. Mi’s move appears to be a response to a new MyRepublic 1Gbps access service priced at S$49.99, eight times cheaper than M1 and StarHub's plans at the time.


It takes little to suggest that once a widespread pricing war begins, disrupting the value-price relationship for consumer high speed access, it is difficult to impossible to reset expectations afterwards.


In other words, one outcome of a prolonged mobile price war in the U.S. market would likely include permanently lower retail prices, across the board.

That, more than the names of the handful of market leaders, is among the few virtual certainties as both T-Mobile US and Sprint battle on the price front.
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