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.