Finding a Method in the Cell Phone Price Madness
MORE recently, carriers have faced another problem: people talk less on their cell phones and text instead. In the first half of this year, the average wireless customer sent 518 text messages per month and made 220 phone calls, according to CTIA figures. (This average, of course, is increased by furious texts from teens.)
Revenues from voice plans have fallen 31 percent from the peak in 2003. To fill this void, carriers increased the price of a text message from 10 cents to 15 cents and then to 20 cents. These charges provided money, but like the voice charges, the main goal was to persuade customers to subscribe to text messaging plans that cost up to $ 20 per month for unlimited texting on AT&T. and Verizon and $ 10 per month on Sprint and T-Mobile.
âIt really makes sense, if you’re texting, to buy an unlimited texting plan and not have to worry about it,â said Will Souder, vice president of pricing at Sprint. Fewer people rack up big bills with 20-cent text messages, but the company’s ARPU still increased because many customers signed up for unlimited texting plans.
THE biggest boon for wireless carriers has been the Apple iPhone, which has increased interest in using a mobile phone to surf the Web.
When it entered the smartphone business in 2007, Apple attempted to reverse the traditional model in which carriers subsidized the cost of handsets. He originally wanted customers to pay $ 599 ?? later reduced to $ 399 ?? for their phones, but they would pay AT&T, its exclusive operator, just $ 20 a month for Internet access, some of which would go to Apple.
Consumers hesitated at the high initial cost. From the second generation of the iPhone, Apple returned to a traditional subsidy model. The iPhone that now costs consumers $ 199 actually costs AT&T around $ 550, according to analyst estimates. To cover the subsidy, the price of the Internet was increased to $ 30 per month.
Yes, consumers are behind on that deal, to the tune of $ 40 over two years, but it wasn’t until the opening price fell to $ 199 that iPhone sales started to skyrocket.