Firms add unlimited call plans
If you’ve got an appetite for talking on mobile phones, major cellphone companies are ready to give you all you can eat.
Three of the nation’s largest mobile phone carriers said Tuesday that they would offer unlimited domestic calling for a flat $100 a month, raising the possibility of a price war and the likelihood that customers finally might be able to understand their bills.
Verizon Wireless was the first to announce the new option early Tuesday, followed quickly by AT&T; Inc. and later by T-Mobile USA, which added unlimited text messaging to its deal.
Together the three control well over half of the cellular market.
The new deals -- the first plans of their kind offered nationwide by major carriers -- underscore the intense competition over existing customers in the maturing wireless market.
The unlimited plans, which also cover long-distance and roaming situations, “may be viewed as a watershed moment in the evolution of U.S. wireless,” analyst Craig Moffett of Sanford C. Bernstein & Co. said in a note to investors.
Sprint Nextel Corp., the only other major cellphone company, is evaluating the results of tests in four U.S. markets where it has offered flat-rate plans for calling, text messaging and Internet access for $120 a month, spokeswoman Kathleen Dunleavy said.
Consumers have complained that disparate offerings from different companies made it hard to compare plans, and they chafed under restrictions on minutes available and steep rates for exceeding those allotments.
They have been increasingly turning to such smaller regional companies as Leap Wireless International Inc. and MetroPCS Wireless Inc., both of which have long offered unlimited flat-rate plans, though roaming and long-distance charges apply when customers leave their calling areas.
Leap and MetroPCS have noted the simplicity of the unlimited plans and the vast reduction in the amount of complaint calls.
The simplicity of a flat rate could give rise to a price war, some analysts concluded, and stocks of the big carriers fell accordingly.
Shares of Verizon Wireless majority owner Verizon Communications Inc. slid $2.49 to $35.34. British mobile phone company Vodafone Group owns 45% of Verizon Wireless.
Shares of AT&T; dropped $1.99 to $35.89. T-Mobile’s German owner, Deutsche Telekom, slipped 4 cents to $19.15.
Although consumer advocates said simplicity was a good thing, their principal reaction was that cellphone calls were astonishingly expensive.
“It’s a great plan if you’re independently wealthy, but when you compare it to the rate for a regular phone, it’s astronomical,” said Regina Costa, a research director at the Utility Reform Network, a consumer advocacy group.
To Moffett, “Verizon has taken the first step in what is potentially a dangerous and slippery slope.” He compared the move to Sprint’s revolutionary switch in the 1990s to a single price per minute for land-line calls, which Moffett said cut short “a long golden season of price obfuscation” and replaced it with pricing battles.
But if there’s going to be a price war, it isn’t coming quite yet, some analysts said.
Fewer than 10% of wireless customers spend more than $100 monthly on voice calls, estimated analyst Charles Golvin at Forrester Research Inc.
The wireless companies themselves predicted no mass shift to the new plans.
“This is going to appeal to a very focused set of heavy voice callers,” AT&T; spokesman Mark Siegel said.
Those most likely to jump include the millions of people who work from home or are constantly on the road, said analyst Kenneth Dulaney at Gartner Inc.
But the market isn’t limited to those already spending $100 a month. Many people are willing to pay $10 or $15 a month extra for minutes they don’t need just to avoid worrying about exceeding their limits, Golvin said.
“Consumers want predictability. They don’t want overages and surprises,” he said.
The $100 limit also will tempt more people to abandon their land lines, a trend already pronounced among younger customers, Dulaney said.
The all-you-can-eat pricing comes as the industry deals with a decline in the amount of voice revenue per user. Revenue from Web surfing and other data transmission is growing rapidly but is harder to predict.
Analysts said that unleashing voice alone wouldn’t make it much more difficult for companies to manage their networks.
The details of the plans, which are officially priced at $99.99, vary by carrier.
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