Thursday, August 18, 2016

Mobile Price Wars Escalate, Again

Another round of price cutting has broken out in the U.S. mobile market. T-Mobile US and Sprint are emphasizing “unlimited” mobile data. AT&T and Verizon are emphasizing “more value,” increasing prices but also increasing usage allowances.
T-Mobile US has launched its “One” offers that provide unlimited data on every plan. For “one low price,” customers get unlimited unlimited domestic talk, unlimited domestic texting and unlimited 4G LTE smartphone data, T-Mobile US says .
Pricing is simple: the first line is $70 a month, the second is $50 a month, and additional lines are only $20 a month up to eight lines (for accounts with auto pay).
Without auto pay, costs are $5 more a month higher, per line. Verizon has introduced a “unified” small business communications system that is “mobile first,” and unifies desktop and mobile communications.
Wasting no time at all, Sprint has countered the new T-Mobile US “One” offer of unlimited mobile data as the standard plan.
Sprint’s Unlimited Freedom plan features two lines of unlimited talk, text and data for a price of $100 a month.
Beginning Friday, Aug. 19, 2016, Unlimited Freedom includes:
  • Unlimited talk, text and optimized streaming video, gaming and music
  • Unlimited nationwide 4G LTE data for most everything else
  • $60 a month for one line
  • $40 a month for a second line
  • $30 a month each for lines 3-10
Recent adjustments of mobile data prices by Verizon and AT&T to raise prices for bigger usage allotments (bigger buckets for slightly-higher prices, producing lower revenue per gigabyte) can be viewed in several ways.
Increasing value is one way of fending off continued price attacks by T-Mobile US and Sprint. In the first quarter of 2016, for example, T-Mobile grew its subscriber base 31 percent. Sprint grew its base three percent. Verizon grew just one percent and AT&T lost accounts.
The attempts to boost perceived value might also be a response to consumer perceptions that tougher economic conditions require more-affordable solutions.
At the same time, consumers might perceive that lower-cost options do not involve unappetizing trade-offs. In other words, high levels of competition have boosted the perceived value of all options, including the “budget” options. And standard retail offers that once might have been deemed “too pricey” no longer have that downside.
The other observation is that the plan revisions by AT&T and Verizon show the continuing trend of lower prices for data consumption. Prices do not fall exactly at rates Moore’s Law would suggest. But in many cases they fall close enough.
As always, such offers are a bet on supply and demand dynamics. As always, a carrier with fewer customers, and more bandwidth, can afford to load its network more heavily than a carrier with lots of customers and more-limited bandwidth.
Also, T-Mobile US is betting that most consumers will continue to use relatively modest amounts of bandwidth. As always, the difference between a formally “unlimited” plan and a plan with “generous amounts of data” is effectively nil.
For users who each need to use only a few gigabytes a month, it doesn’t matter whether a plan offers 10 Gbytes or is actually unlimited.
Some have argued that mobile marketing wars are moderating. Others might argue the facts indicate otherwise.

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