Price Ceiling For Mobile Voice Service Continues To Fall

from the a-good-kind-of-deflation dept

T-Mobile has announced that it’s expanding its offer of a $50 per month unlimited voice service plan across the US, becoming the first of the country’s four biggest operators to start to fall into line with the $50 voice ceiling. Given the constant price battles in the mobile industry, you’d expect the other major operators to follow T-Mobile, or lower the prices of their current unlimited offerings that also include text messages and data. But one interesting aspect of the T-Mobile plan is that it’s only available to customers that have had T-Mobile accounts in good standing for at least 22 months, making it more of an effort to retain existing customers than attract new ones. This reflects the rapidly changing focus of the business from attracting new customers to also retaining current ones. One of the quandaries posed by US mobile operators was that, historically, they gave better deals and prices (especially on new handsets) to new customers than current ones, giving good customers an incentive to churn to a rival so they could get a free new device. This stance has changed over the last couple of years, as the industry standard contract length has grown from one to two years. Second, the T-Mobile offer reflects the company’s standing in the market. Its quarterly net subscriber additions are falling, while the company’s seeing a lot of competition at the low end of the market. This new plan is aimed at helping on both fronts.

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Companies: t-mobile

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Comments on “Price Ceiling For Mobile Voice Service Continues To Fall”

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12 Comments
Relonar says:

Re: Why dont we have a DNS for phone numbers?

offtopic, but … epic.

someone get this man a beer.

… a pen,
and a non-disclosure form so I can make sure I file for the patent first. I can make it so vague also, that any system that shortens a phone number or transforms it, as to make it easier to hold in human memory, is covered.

ok that last part was just plain bad taste, although very, very good idea.

Ron says:

22 months

Hmmm…. 22 months is just shy of a common 24-month contract end, and is most likely a time the subscriber is shopping around. Nice way to target those most likely to be thinking of switching.

Could be expensive, but only in the long run. That discount would add up if it were to run to perpetuity, unless they limit it to the life of the new contract period. Then again, since rates are gradually declining, that discount rate will eventually be the standard rate, so it works out for everyone.

At first glance this looks like good marketing.

Derek Kerton (profile) says:

Voice Is a Capped Service

Wow, $50 is pretty low. Almost approaching the prices of MetroPCS and Cricket. Yet, given that “unlimited” voice is a capped service, it seems reasonable that over time, the price will continue to drop to lower flat rates.

How can I say that “unlimited voice” is a capped service? Because even if you talked on your mobile phone 24/31: every minute of the month, you would only consume about 2.5GB of capacity. Therefore, there is a natural cap on voice service of 2.5GB.

See my math on the subject at:
http://www.kerton.com/papers/kertoncall_unlimited_voice_unlimited_data.htm

In that article, I contrast how data service is going from “unlimited” to capped, even as voice is going from capped to unlimited. The underlying throughputs and economics makes this an obvious direction for the markets to go.

Anonymous Coward says:

Re: Voice Is a Capped Service

Wow, Derek. You’ve done the math to determine AMR vocoder bandwidth usage. I bow down to you. 🙂

TMO could also use this as an opportunity to upgrade customers to more efficient 3G handsets, subsequently leading to better use their new 1700MHz real estate available in highly populated areas.

It could work on multiple levels.

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