Wireless Carriers Quietly Admit New 'Price War' With T-Mobile Doesn't Really Exist

from the sorta-kinda-competition dept

A lot has been made about the wireless industry’s recent bout with price competition, most of it courtesy of T-Mobile. Through a number of more consumer-friendly programs ranging from the elimination of device subsidies to offering free international data, T-Mobile has started finally getting larger carriers like AT&T and Verizon to respond ever-so-slightly on price (not without ample hand wringing and consternation of investors). With CEO John Legere mocking companies like AT&T almost every day on Twitter, the overall narrative is that the wireless industry is seeing an intense, fresh burst of competitive energy and that consumers are reaping the rewards through cost savings, right? Not so much.

In reality, prices steadily continue to go up as carriers cut prices on some services, but raise prices elsewhere or redesign pricing entirely to recoup any losses. While you might now save money on voice and text under AT&T and Verizon’s new shared data plans, for example, you’ll now pay more money for data and to simply connect your phone to the network. While you’ll no longer pay a subsidy on your phone or sign a contract, you might wind up paying more for one of the carriers’ new handset early upgrade programs or get dinged by a random new fee. That’s not to say that a lot of what T-Mobile is doing competitively doesn’t benefit users, but price competition is still intentionally being kept to a minimum by all parties involved in contrast to the press narrative.

As such, it’s amusing to see T-Mobile’s CEO busily playing rock star and professing to love cutting prices, while the company’s CFO quietly admits they’re not actually interested in a price war:

“T-Mobile raised the cost of its core unlimited data plan on Friday. The carrier says it has been competing more effectively by doing away with subscriber “pain points” like service contracts and international data fees. But its executives have also been signaling that they don’t plan to start a price war. “When you really analyze a lot of the pricing moves that have been made, there has not been a significant repricing,” (T-Mobile) Chief Financial Officer Braxton Carter said at a Morgan Stanley conference last week.”

And Verizon, despite T-Mobile’s supposed waves in the sector, similarly admits they’re not really seeing things all that differently:

“I think it is interesting given my years in the industry, how you hear things like price war and all that being kicked around in the media today and this is really nothing different than we have seen over the last couple of decades,” Verizon Chief Executive Lowell McAdam said on a conference call last month.”

That’s not too surprising, as Verizon has a vested interest in assuring stockholders things are fine, and they’ve long argued their superior network is ample justification to refuse to compete on price. In contrast, T-Mobile wants investors to see the company as disruptive, but investors also know that a price war will greatly hamper efforts to improve T-Mobile’s greatest weakness: much smaller overall network coverage.

Still, the fact companies are allowed to pick and choose when they actually get to engage in a price war is pretty telling about the state of competition in wireless. Despite the ample press coverage T-Mobile is generating, AT&T and Verizon together control about two-thirds of the retail market (and the resulting profits), they’ve cornered most of the available spectrum, and they control roughly 80% the “special access” market (they lease point to point connections that power all other services). Carriers have enjoyed some absolutely amazing profit margins on wireless for years (SMS, which costs carriers virtually nothing to provide, being just one example), and absolutely nobody wants to kill the cash cow.

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Companies: at&t, t-mobile, verizon

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Comments on “Wireless Carriers Quietly Admit New 'Price War' With T-Mobile Doesn't Really Exist”

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18 Comments
Ninja (profile) says:

You know what real competition is?

Let your customer build an entirely custom plan. Ie:

Basic plan: $10
– unlimited voice calls for local landlines and mobile from the same carrier
– unlimited SMS

Extras:
Add video calls (unlimited) for the same carrier: $5
Add long distance (unlimited) for the same carrier: $5
Mobile data: $5 per mbit with a discount (ie:5, 7, 10 max %) every 5 mbit, no data caps, only bandwidth limits
Other carriers, local: $5 per every 10 minutes added in the package (with discount every x minutes added)
Other carriers, long distance: $3 per 10 minutes (enables regular minutes to be used as long distance)
Roaming (national, unlimited): $1 per day, $10 unlimited
Roaming (international, unlimited): $3 per day, $30 unlimited
International minutes: $10 per 10 minutes

And so on. Make it so you can switch online to fit your needs, add benefits for those that choose more complete, broad plans such as giving discounts in new phones. The possibilities are many.

Anyway that was offtopic and my own wet dream. First there will need to be real competition…

Anonymous Coward says:

Re: Re:

KISS principles apply here, i believe

they have already priced overage charges at something like $1/GB. So sell it at $1/GB.

My wet dream would be to include the best portions of your wet dreams.

Basic plan: $10
– unlimited voice calls for local landlines and mobile from the same carrier
– unlimited SMS

Extras:
internet connectivity: $5/GB

Dont use the internet on my phone – my bill is $10. Use netflix? my bill is like $40. Only use facebook? my bill is probably $10+$5=$15.

of course, this completely blows away the hidden traps, so it must be a bad idea.

Anonymous Coward says:

Re: Re:

I get that (sorta)…. in the UK. You can get what you want for about ?5pm if you are a virgin cable customer)

what I have….
30-day contract
SIM Only
Unlimited BlackBerry Messenger
Unlimited minutes
Unlimited texts
Unlimited Mobile Web

?15 Pay Monthly contract

http://store.virginmedia.com/virgin-media-mobile/sim-only/pay-monthly-sim.html?intcmpid=MOB_PAYM_Product_VIPSIMO_ban3

Americas mobile market is a fucking rip off. I thought we were bad with the usual “landline rental” bullshit. You guys have taken it to another level tho.

Anonymous Coward says:

Re: Re: Re:

Have to visit Germany some time. Berlin, Tokyo and New York are on my bucket list.

Yep…Much better than payPerMB. My BB is similar. Just don’t download more than several GB between 4pm and 9pm and you won’t get throttled. Outside those hours and you can max out all the time if you want. Easy to do with free usenet >_

Anonymous Coward says:

As long as consumers are beholden to their carriers to offset the cost of their phones the carrier will continue to exert pressure on them to swallow whatever shitty contract they dream up. It couldn’t be more obvious either given the positively massive price disparity, feature for feature, between pre-paid prices and contract rates. What will change this is hardware manufacturers selling phones like the Nexus 4/5, the Moto G/X, or the oppo n1. Phones with decent specs, mid-range to flagship tier, that are pretty comfortably priced off-contract to compete with the on contract prices of Samsung and Apple phones. That’s what will drive changes I think.

Anonymous Coward says:

I just recently found out about ‘mobile virtual network operators’. MVNO are companies who lease access to existing mobile wireless infrastructure (AT&T, Verizon, Sprint, T-Mobile), but operate their MVNO business independently.

Advertising, phone sales, and customer support are usually handled by the MVNO, but if the MVNO leases access to Verizon, then you will have access to all of Verizon’s base towers, and coverage area. Even though you’re not technically a Verizon customer.

It’s the closest thing America has to a competitive mobile phone market, and the MVNO prices are usually lower, with no contracts, or predatory hidden fees.

https://en.wikipedia.org/wiki/List_of_United_States_mobile_virtual_network_operators

Anonymous Coward says:

The T-Mobile pricing war is not simply about reducing one’s monthly rate, but about getting the most for your money. They have unlimited high speed LTE data plans that are really enticing to many people, even me who’s on AT&T’s “unlimited” plan. AT&T’s plan allow me to get 5 gigs LTE speeds before being throttled. Since they are not up to par regarding coverage, I have not switched over yet. I am contemplating switching in a year or two.

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