‘Roaming’ Era Nears Its End
The wireless phone, like the pager before it, has spent years as a gadget for the elite, the mobile and the image-conscious. But just as the pager gradually made its way to the waistbands of teenagers, new competitors and lower traveling fees are steadily chipping away at the cost of going wireless and slowly putting mobile phones in the hands of more consumers.
The latest market shift--led by AT&T; Wireless--is the elimination of special “roaming” fees. The fees are typically added to the per-minute price of calls customers make or receive while traveling outside their “home” regions.
New price plans come along regularly in the industry. But for travelers and heavy users, the no-roaming-fee packages represent a substantial switch--and potentially huge savings.
“This is certainly the beginning of the end of roaming as we’ve known it in history,” said Mark Lowenstein, a senior vice president at the Yankee Group, a Boston research firm.
“It’s changing the behavior of high-end users, who are now forking out large monthly fees for these plans,” he said. “And the meter is not running in their heads anymore.”
Roaming charges, along with add-on fees for long-distance calls, have pushed out-of-town mobile calls to astronomical prices--sometimes to more than $1 per minute--so travelers would leave their wireless phones at home or limit usage while on a trip.
To date, at least five wireless carriers have announced plans that significantly reduce the cost of wireless conversations on the road. Last week, two Los Angeles-area carriers, AirTouch Cellular and L.A. Cellular, joined in.
Sprint PCS and Nextel Communications, two other Southern California carriers, already offer plans without the extra roaming charges. Last week, Sprint PCS unveiled three new fixed-rate wireless plans. Pacific Bell Wireless, formerly Pacific Bell Mobile Services, allows customers to use their phones within its California and Nevada coverage area without roaming charges (but with long-distance fees). It remains the only local provider not yet selling a service package that eliminates nationwide roaming charges.
“We’re beating hotel rates right now, and in some cases, we’re beating pay phone rates,” said Melissa May, a spokeswoman for AirTouch. “Everybody’s trying to steal land-line minutes, and plans like these will encourage people to shift more phone use to cellular.”
The concept of pricing simplification and national flat-rate pricing is taking hold throughout the industry, said Andrew Sukawaty, chief executive of Kansas City, Mo.-based Sprint PCS. “Obviously, when AT&T; does it, it puts pressure on the local and regional guys. It’s big money out of their pocket when they try to match those kinds of prices.”
Roaming charges stem from the fees carriers pay each other when their customers tap into each other’s networks when traveling. Carriers with their own national networks can more easily afford to eliminate roaming fees.
Because regional carriers have networks in more limited areas, they would have to absorb substantial costs if they eliminated roaming fees.
Long-distance rates present the same problem--unless you happen to be in the long-distance business as well, like AT&T; and Sprint.
“Nobody but AT&T; has the ability to do what customers want, which is a simple one-rate plan, with no roaming and no long-distance fees,” said Greg Farrell, vice president of marketing for L.A. Cellular. The company is a partnership between AT&T; Wireless and BellSouth, but it is not offering AT&T;’s Digital OneRate plan.
The next step in the wireless industry, according to Daniel R. Hesse, president and chief executive at AT&T; Wireless, is to offer customers the same per-minute price whether they are using a traditional phone with wires or a mobile phone.
There was no start date given for such a plan, but it would be in line with Hesse’s goal of simplifying prices for customers and joining AT&T;’s dominant long-distance business with its national wireless operation.
Hesse also suggested that the no-roaming plans could easily spread to include one flat per-minute price for using a satellite communications network and a lower per-minute price for customers using the standard ground network.
“It’s doable from our end,” Hesse said at an industry conference. “There will be OneRate packages that include other countries.”
Nextel Communications, a business-oriented carrier with two-way radio communications features, was the first to eliminate the roaming charge. The company advertised its no-roaming advantage aggressively and has surprised rival carriers with its success.
Sprint PCS tiptoed in early this year with a plan that eliminated roaming and allowed customers to tap their free minutes while traveling, but still incur long-distance charges. But the industry didn’t feel pressure to follow suit until AT&T; Wireless, with its 8.5 million U.S. subscribers, unleashed its flat-rate digital plans in May.
Bell Atlantic followed, then AirTouch, and, late last week, L.A. Cellular--although all of those carriers still charge long-distance fees in many cases. Sprint PCS weighed in with a limited-time offer that eliminates both long-distance and extra roaming charges. Most of the plans stipulate that the user travel within the host company’s network, or within regions covered by company-to-company roaming agreements.
Now, with the cost penalty reduced to just the “home rate” plus long-distance--or just the home rate for AT&T; Wireless customers and certain Sprint PCS users--mobile phone customers are using their phones more while on the road.
“With the OneRate plan, we’ve seen the growth of minutes of use just go through the roof,” Hesse said.
Under AT&T;’s plan, high-end users pay a monthly fee for a package with a minimum of 600 minutes of calling. Additional minutes cost 25 cents each, and users pay that rate while traveling--with no add-on roaming or long-distance charges. They must buy a special phone to sign up for the plan, and stay within AT&T;’s network.
The plans have been a magnet for heavy travelers and other big-ticket mobile customers. And although those customers usually represent a small fraction of a carrier’s user base, they also are the most lucrative and valuable customers--and that’s what forced the other carriers to join in.
For now, though, Pacific Bell Wireless is continuing to steer clear of the no-roaming trend.
“We’re keeping our eyes on national trends, but we feel we’re in touch with the pulse of California, and our customers seem to like what we offer,” said John Britton, a PacBell spokesman.
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Times staff writer Elizabeth Douglass can be reached via e-mail at elizabeth.douglass@latimes.com.
