Smartphone Plan Pricing Changing Rapidly in the US Market
American mobile phone market is entering a period of turmoil as the number of new subscribers slows down. In recent quarters, smaller operators like Metro PCS, T-Mobile and Sprint have lost hundreds of thousands of mobile subscribers, even as AT&T and Verizon have hiked up the price of cheapest smartphone plans. In the coming Christmas quarter, more than 75% of consumers buying a handset will opt for a smartphone – and challenger operators are declaring a price war.
This week saw two major announcements. Metro PCS is rolling out a new smartphone plan for as little as $55 and T-Mobile’s new unlimited plan starts at $90. Both carriers have suffered from the perception that their coverage and handset selection are sub-par compared to AT&T and Verizon. Their earlier value package campaigns have floundered on negative consumer views of their service quality.
But the pricing dynamics are now changing rapidly. Both AT&T and Verizon have dropped their cheap smartphone plans that used to offer limited texting and voice minute pools; the Top 2 carriers now demand that all new smartphone buyers buy unlimited voice and texting when entering a new contract. This has hiked the price of the cheapest Verizon smartphone plan to $90 from $70 – a notable increase considering the $90 plan offers a relatively small mobile data package.
The US smartphone market is now experiencing a rapid series of price changes that poses a complex challenge for consumers. How big of a premium is it reasonable to pay for the strong mobile coverage that AT&T and Verizon offer? How appealing is unlimited data from a second-tier carrier compared to limited data package from a leading carrier?
It’s highly likely Sprint will enter the fray later this autumn and offer its own budget smartphone plan. Now that 50% of American mobile subscribers already own a smartphone, the remaining pool of possible smartphone buyers consists mainly of households with lower than $60’000 annual household income. For these consumers, budget plans may be a lot more tempting alternative than they were for the first wave of smartphone buyers. It’s quite possible we’ll see notable market share surprises in the US carrier field during the coming winter.
