What’s behind new cell-phone plans?

Janet Babin Feb 20, 2008
HTML EMBED:
COPY

What’s behind new cell-phone plans?

Janet Babin Feb 20, 2008
HTML EMBED:
COPY

TEXT OF STORY

KAI RYSSDAL: According to a Zogby Poll out this morning, 54 percent of Americans think the economy’s already gone under. If you’ve been paying any attention to your cell phone bill, you know inflation came to mobile prices long ago, but for the really big talkers among us, that trend might be heading the other way. Yesterday, Verizon unveiled a flat-rate calling plan for $99 a month, and that’s just the beginning.

From North Carolina Public Radio, Marketplace’s Janet Babin dials into the latest round of cell phone price wars.


JANET BABIN: There are several theories about why Verizon shook things up with a flat mobile rate. One is that Sprint had already begun testing a similar plan. Another is the iPhone effect. Verizon has been losing customers to ATT and the iPhone, but industry analyst Scott Ellison, with IDC, says the real reason is market saturation.

SCOTT ELLISON: Now that 80 percent of all Americans have a cell phone, there are fewer and fewer new subscribers to sign up, so now people are looking for ways to attract other subscribers.

A $99 plan may be a tough sell though. Few people spend that much on voice each month, but the plans might appeal to anyone who’s been hit with overage fees, those outrageous bills for going over your minutes. Telecom exec Daniel Berninger says the extra charges make flat rates more attractive.

DANIEL BERNINGER: Even if people aren’t necessarily spending that much, they may be inclined to take these plans just for the peace of mind. So we’re starting at $100 plans, and then the next guy’s going to introduce the $80 plan, et cetera, et cetera.

With top wireless firms offering similar voice plans, Scott Ellison, with IDC, says the competition now moves to text messaging and Internet access.

ELLISON: The main battle for subscribers is now probably going to shift from voice plans, because now everyone’s offering the same thing, to the data plan.

T-Mobile is offering unlimited text messaging with its $99 plan, and Sprint’s text plan, at $120, includes E-mail, messaging and Web use.

I’m Janet Babin for Marketplace.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.