Average Mobile Phone Bill in U.S. is Growing Despite Competition
March 10, 2014 10:25 AM
Wireless carriers are wringing more money out of customers than previous years
One of the reasons that the FCC wants at least four major carriers in the U.S. wireless industry is for greater competition. The general hope is the increased competition will lead to lower prices for consumers, but that well-meaning sentiment isn’t exactly going according to plan.
Carriers aren’t competing aggressively on price and are pushing users to gobble up as much data as possible according to a new report from
The Wall Street Journal
. Carries are also working hard to eliminate smartphone subsidies. "As you approach 90 percent penetration, you move into maintenance mode. That means more device upgrades,”
AT&T CEO Randall Stephenson stated in December
. “And the model has to change. You can't afford to subsidize devices like that."
T-Mobile increased the price of its unlimited data plan by $10 on Friday. Rather than competing on price, the carrier says that it is removing what it calls "pain points" like service contracts and international data rates. Executives at the company don't want to start a price war.
"When you really analyze a lot of the pricing moves that have been made, there has not been a significant repricing," said T-Mobile Chief Financial Officer Braxton Carter.
The average monthly revenue per postpaid users for wireless carriers has grown across the wireless industry by 2.2% to $61.51 in Q4 2013 according to New Street Research. That is an increase of $5 per user compared to Q1 2010. The result of new pricing plans and increased data consumption by wireless subscribers in the U.S. is that revenue has rose 0.9% in Q4 compared to the previous year. That increase is a reversal from long running declines in the industry.
"It has gotten a little more competitive lately, but it isn't effectively competitive yet where the big two have to lower prices,” said Matt Wood, Policy Director for public advocacy group Free Press.
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