Investors Whine As T-Mobile Finally Forces Verizon Wireless To (GASP) Compete On Price

from the boo-hoo dept

For several years now, Verizon Wireless has tried to make the argument that they don't have to compete on price because their network is just that fantastically awesome. The position wasn't entirely unsupportable, given that Verizon Wireless tops most customer satisfaction studies, has the largest LTE network, and hadn't to this point been seeing many customer defections. The result has been some of the highest wireless prices (and profits) in the industry, with Verizon getting away with offering the occasional, cosmetic promotional offer. The problem for Verizon is that real price competition (a rarity in U.S. telecom markets) isn't something you get to just wish away (at least not without some form of potent voodoo).

Enter T-Mobile, which in recent months has been a rare disruptive force in the market, working to eliminate long-term contracts and ETFs, while slashing prices and embracing a number of new, pro-consumer policies (like free international data when roaming overseas) that heretofore had been quite foreign for a largely duopoly-controlled industry. T-Mobile's shenanigans have resulted in investors whining for months about the possibility of Verizon and AT&T *GASP* actually having to compete on price, as this recent, unintentionally-hilarious Reuters report illustrates:
"The most disappointing thing is that AT&T is reacting to T-Mobile," said Jefferies analyst Michael McCormack. "How long is it before Verizon reacts?"...McCormack (is) worried about the implication that industry revenue could be cut by $20 billion. "That's clearly not a healthy sign."
Yes, how disappointing and unhealthy that a government-pampered duopoly has to suddenly compete on price, eroding artificially-inflated revenues resulting in better, cheaper service for everyone! McCormack's hellish, truly-Lovecraftian fears came true this week, as Verizon finally buckled to T-Mobile pressure and started competing more seriously on price. The company began offering loyalty discounts to existing customers, and unveiled a suite of new data options that boost data allotments for many users. While still not in range of T-Mobile's pricing, it's a start of something more closely resembling real competition in the wireless space.

The horror. The horror.


Reader Comments (rss)

(Flattened / Threaded)

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    That One Guy (profile), Feb 18th, 2014 @ 3:56pm

    So simply having to compete on price is supposedly enough to cause a 20 billion dollar drop in revenue... I wonder if he realizes that he pretty much just said that the current players are hosing the public over for $20 billion due to their duopoly position?

     

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      Keisar Betancourt, Feb 18th, 2014 @ 4:55pm

      Response to: That One Guy on Feb 18th, 2014 @ 3:56pm

      I suppose it's time for them to realize just because people are willing to pay for the lesser of two evils doesn't mean they like paying for evil.

       

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    Anonymous Coward, Feb 18th, 2014 @ 5:02pm

    Huh - what ever happened to the unfettered capitalism and free market mantra that is spewed on a continual basis.

     

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      jupiterkansas (profile), Feb 18th, 2014 @ 5:33pm

      Re:

      Free market's great when you're making more money, but when you start making less it's time for government bribes and a PR maelstrom.

       

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      Anonymous Coward, Feb 19th, 2014 @ 2:43am

      Re:

      Free markets means no competition and the unfettered freedom to price gouge.
      /sarc

       

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        Pragmatic, Feb 19th, 2014 @ 8:12am

        Re: Re:

        Yep, and that's the problem. There's no such thing as an ACTUAL free market, such things don't exist due to monopolies, duopolies, oligopolies, and cartels. Add to that hoarding to artificially inflate prices, and you get the idea. It's why I always slap down free market/anti-regulatory enthusiasts.

        I hate government overreach as much as anyone else does, but I also hate it when they don't do their job by protecting the weak from the strong and consumers from being gouged and conned, etc.

         

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          Anonymous Coward, Feb 19th, 2014 @ 8:29am

          Re: Re: Re:

          Not to start an argument but everything you said about the free market applies to the government. So we are still stuck with the evil of two lessers.

           

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    Namel3ss (profile), Feb 18th, 2014 @ 5:27pm

    I must say I really like having Karl around on TD. The stuff he covers is I think important to many (all?) of us here and I hope he stays a while and continues his excellent contributions.

    This Bud's for you Karl! :beer:

     

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    Anonymous Coward, Feb 18th, 2014 @ 5:29pm

    "Industry Revenue"

    I knew I was being bilked, but if they lose $20 billion just by competing with T-Mobile on price, whoa-boy was I being robbed.

    I just switched from Verizon to T-Mobile in December, for almost full disclosure except for my relative anonymity.

     

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    Janey, Feb 18th, 2014 @ 6:38pm

    Good. Simply put, fuck Wall Street and fuck these greedy investors.

     

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    Erik Grant, Feb 18th, 2014 @ 6:40pm

    I'm disappointed that I can't justify switching to T-Mobile. I want to vote with my dollars to reward the company actually competing, but sadly, I have a grandfathered unlimited 4G data plan through Verizon. It makes me sad inside.

     

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      That One Guy (profile), Feb 18th, 2014 @ 7:03pm

      Re:

      If it makes you feel any better, with an unlimited plan I'm sure they'd really rather you switch as well, or at least 'upgrade' to a crappier, more expensive plan, so if switching isn't viable, at least enjoy the fact that they can't hose you over as much as they wish they could.

       

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      Kalvan (profile), Feb 19th, 2014 @ 2:38pm

      Re: switch hitter!

      I recently switched from Sprint to T-Mobile and I've been very happy with the change. I'm saving over $100 a month for a family of three.

      On the data front, here's what T-Mobile does. You have unlimited bandwidth. After you reach a limit, they throttle you down to lower speeds. If you need more than 500mb per month of high speed data (the default) you can get an additional 2gb for $10 a month. When you get the additional bandwidth, they enable tethering at no additional charge.

      I paid over $500 to be shut of Sprint. It's the best $500 I have ever spent!

       

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    trparky (profile), Feb 18th, 2014 @ 7:55pm

    Still a ripoff...

    I just looked at the new plans over at Verizon and they're still a complete ripoff.

     

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      Anonymous Coward, Feb 19th, 2014 @ 8:31am

      Re: Still a ripoff...

      Same here. Yea, you get unlimited talk and text but since I don't even use all that my plan offers now that is just fluff.

       

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    Anonymous Coward, Feb 18th, 2014 @ 10:16pm

    Velots are sheep, they don't know any better. A smart customer is not doesn't use verizon.

     

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    Anonymous Coward, Feb 18th, 2014 @ 10:25pm

    So glad Sprint was denied the acquisition of T-mobile. This is when the fun begins!

     

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    Anonymous Coward, Feb 19th, 2014 @ 1:20am

    Don't you worry.

    T-mobile is just the same, only in US they are the underdog. In Germany they are sooooooooooooo unhappy having to compete. Imagine - compete! In their own home country! Unthinkable!

     

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    Robert (profile), Feb 19th, 2014 @ 7:21am

    Too little too late

    I had been a long time Verizon user with 5 lines. But when T-Mobile was able to cut about a third off of my monthly bill AND had their offer to pay for my early termination fees, they pretty much won. I switched last Sunday and the service has been sufficient; I lose signal in my work elevators now, but that's about the only problem I've had.

    Also pleased as the dickens that I can just grab any unlocked phone and sell off my previous model anytime I like.

     

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    vastrightwing, Feb 19th, 2014 @ 9:31am

    I just wrote Verizon about being a ripoff

    While this is FIOS and not phone service, I think my letter to Verizon below illustrates their corporate culture of not offering value unless they are forced into it. In my case, there is an oligopoly in the internet space.

    I sent this letter to Verizon yesterday. I am wondering if they will respond. I doubt it.

    Dear Verizon,

    I am considering canceling my FIOS service because you raised the price beyond the point I'm willing to pay.

    The service has been excellent, the speeds are consistent and good and I have enjoyed FIOS a lot. It is simply a decision based solely on value. I am simply not willing to spend $52.99/month for Internet. I feel like you take me for granted because every few years you keep raising the price, but not the value to me.

    I called you several times to negotiate a better rate. I also tried to sign up for $19.99/month DSL. None of these options are available to me. My only option is to leave you completely and go to your competitor, RCN. They are willing to give me faster service for only $29.99/month for the first year, and $39.99 next year. At that point, I will try to negotiate a better deal or I may come back to Verizon if you offer a tier of service at a price point I'm willing to pay.

    You offer no lower tiers of service. I would be fine with 5 mbps, but you do not offer it. My needs are very modest. You understand this, but people have been more than willing to cede to your demands. I predict more and more of us will drop out as you remove options and continue to raise your rates above the value you offer.

    Please take no offense, but an Internet connection is a basic commodity now. All I ask for is a simple RJ45 connection and 5 mbps of bandwidth. Paying more than $20/month is paying too much. At this point, I do not want TV, phone, email, hosting, a router, software, or anything. However, consider this; losing me as a customer means if I decide to subscribe to phone or TV, I'm more likely to go with RCN since I will have their cable active. If I ever need more bandwidth or services, I will use the provider who gives me the best value. Right now it is not Verizon. I don't need to tell you that it's cheaper to keep existing customers than it is to get new customers. Once I'm gone, getting me back will cost you more.

    Don't worry, I won't be offended when you don't reply, after all it's just business. I know.

     

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    limbodog (profile), Feb 19th, 2014 @ 9:54am

    As a Verizon Wireless customer

    So... T-Mobile... How *you* doin?

     

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