5G providers getting wiggly on pricing and promotions

5G providers in the US – ranging from Verizon to UScellular – are desperately struggling to keep their service pricing both competitive and profitable. For some, that means raising prices. For others, it means introducing new, and in some cases, unique promotions. And for T-Mobile, it represents an opportunity to blast its competitors.

"AT&T came out ... with surprise price hikes for a bunch of their customers, because of course they did. They're AT&T," T-Mobile CEO Mike Sievert deadpanned last week during a company media event. Indeed, AT&T recently boosted prices for millions of its mobile and fiber customers after hinting it might do so due to inflation.

For his part, Sievert pointed out that T-Mobile recently introduced its "Price Lock" service for its fixed wireless access (FWA) service, which promises to keep the service at $50 per month indefinitely.

T-Mobile isn't alone.

UScellular last week said that all of its postpaid and prepaid plans are now "price protected" through 2023. "Our customers have enough on their minds, and they shouldn't need to worry about their wireless rates going up. Whether they're a brand-new customer or have been one for years, their rate plan will not increase," said Laurent Therivel, the company's CEO, in a release.

UScellular transmits its signals from atop cell towers. (Source: UScellular. Used with permission.)
UScellular transmits its signals from atop cell towers.
(Source: UScellular. Used with permission.)

But UScellular did so after reporting postpaid quarterly net customer additions far below most estimates. In the first quarter the company lost 44,000 postpaid customers, far above most analyst expectations of 5,200 losses. UScellular remains one of the nation's biggest mobile network operators with roughly 5 million customers spread across more than a dozen states.

Broadly, the developments reflect the influence of a number of major factors in the US wireless industry. First, there are indications that the outsized customer growth of years past is coming to an end. Separately, operators are warning that rising inflation could affect their finances. Finally, entrenched mobile operators are generally working to address incursions by cable companies like Comcast and Charter Communications into the wireless industry.

"It's really been a very aggressive upgrade environment. Particularly from AT&T," argued UScellular's Therivel, according to a Seeking Alpha transcript of his company's earnings call last week. He said T-Mobile's big 5G network expansion is also creating competition for the company, as well as cable operators like Comcast and Charter.

In response, Therivel promised UScellular would work to introduce new offerings and promotions in order to remain competitive, though he didn't provide details. "Later in the quarter, we're going to be doing a relatively substantial move," he hinted.

Meantime, AT&T, T-Mobile and Verizon all introduced new promotions of their own in recent days. Specifically, AT&T announced a new discount for teachers, T-Mobile announced a $1,000 Mother's Day discount for new customers, and Verizon announced a $800 phone discount for new and existing customers.

However, Wave7 Research analyst Jeff Moore described the gyrations as a "Mother's Day blip" rather than a major new phase of competition in the industry.

Nonetheless, the stage certainly appears set for more pricing developments. Bloomberg reported last week that Verizon is considering a price hike similar to that of AT&T, in response to inflation.

"We are skeptical of claims that carriers are raising wireless prices because of inflation," Diana Moss, president of the American Antitrust Institute, told Bloomberg. "It is too easy to blame price increases on such an obvious factor."

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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