Thanks, Recession! Cell Plans to Get Cheaper

Perhaps the only shot that Mobile carriers will have at growth in 2009 will be to cheapen their plans.

It never used to be this way, according to the AP; it was once the carrier with the slickest phones and the most capacious data and voice plans that wooed investors and drove stock prices. But with the success of Boost Mobile, a low-cost off-shoot of Sprint that offers unlimited no-contract plans for $50, other companies have begun to follow suit, rolling back prices on many plans and offering incentives on others.

Sprint launched its low-cost plan under the Boost brand in January to combat the success of two other low-cost competitors, MetroPCS and Leap Wireless. With three companies in the cheap prepaid game, Virgin Mobile, another major prepaid player, had to drop its prices to meet the new $50 benchmark shared by the other three companies. That industry-wide shift should begin to effect the traditional post-paid cell phone contracts, say analysts, bringing down the cost of the $100 unlimited data and voice plans that are popular with 2- and 3-year contract holders on AT&T, Verizon, T-Mobile, and Sprint.

T-Mobile is the first to begin trials of its new, cheaper contract service. The company has introduced a $50 unlimited post-paid “retention offer” for longtime customers whose contracts are close to ending, but the AP suggests that the offer might morph into new-user incentives after its success is proven.

AT&T, which owns Tracfone, the largest prepaid service in the nation, might be in a better position to combat companies like Boost and MetroPCS without adjusting its post-paid rates. Verizon could do the same by acquiring MetroPCS, that utilizes technology already compatible with Verizon’s CDMA network. But with ever-tightening family budgets constraining cell phone purchases and renewals, the market for low-dollar, full-featured contract plans is growing.CD