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4G/3G/WiFi

Time for a 4G Price War Already?

6:00 PM -- It looks like a price war is already on for Long Term Evolution (LTE) devices, but 4G data plans remain stubbornly expensive for most smartphone users.

Consider: Sprint Corp. (NYSE: S) has just announced its first LTE phone -- the LG Electronics Inc. (London: LGLD; Korea: 6657.KS) Viper -- priced at $100 with a contract. AT&T Inc. (NYSE: T), meanwhile, is pinning its early LTE smartphone hopes to its $100 Nokia Corp. (NYSE: NOK) Lumia 900 Windows phone.

Yet there doesn't seem to be much enthusiasm for trying to undercut the competition on the pricing that really counts: the data plan.

Sprint is -- at least -- sticking with its unlimited data plan for the foreseeable future. It starts at $69.99 and runs up to $99.99 for "Everything" data plans with various levels of voice minutes, but tacks on a $10 monthly up-charge for smartphones with data plans.

AT&T will charge you $20 for a 300MB data plan, $30 for 3GB or $50 for 5GB. That's before you add voice and any overage charges.

Even MetroPCS Inc. (NYSE: PCS) has just increased the cost of its unlimited LTE plan to $70.

I know that all the carriers are spending big on deploying 4G; that's to be expected. But, wasn't one of the selling points of LTE that it reduced the "cost-per-bit" for delivering data to users? My impression is that we're just looking at business-as-usual -- or worse -- from the operators with regards to 4G data plans.

You know things are a little off when Verizon Wireless looks like one of the better bargains in LTE with its limited-time offer to double up data plans with 4GB for $30, 10GB for $50 or 20GB for $80.

— Dan Jones, Site Editor, Light Reading Mobile

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Telco 12/5/2012 | 5:37:15 PM
re: Time for a 4G Price War Already?

I am still recommending to the carriers muted deployment of 4G, even if no incentive for customer migration.  Even in  my local market my provider is selling 4G on every piece of collateral, and new phones but has not scheduled the market for 4G yet. It is the way it has to be for now.


Cellular is now operating in the cost burdens of the former wireline/cableco business inregards to broadband and Apps.  They have all the burden of leveraged assets, equity and fund-raising is limited, all that is left is bonds and that attractive cash-flow.  The operators have lost growth except for negative growth which is what DATA is.  More Bytes, more bandwidth, less revenue (even with less router/memory/technology cost, there is reconfiguration and capitalizing the new technology). 


DATA Growth model has not been resolved (Portals are not working except by captive audience measures - the DPI equipment is installed but little Business Analysis tools deployment means Advertiser and partner revenues are muted in the Portal model).  The ability to revenue share with Content providers who could chew up more than App providers who are sharing revenue needs to be solved by 1) increasing subscriber pricing 2) Results for Advertisers and partners in the Portal 3) charging premium BGP contracts to Content providers.  


I am still recommending slow 4G deployment/migration of users with no incentives until the DATA pricing can offset the cost of new network deployments.  Otherwise equity owners will sell due to under performing assets.  Banks and Bonds will not sell due to selling at low margin practices.

gtchavan 12/5/2012 | 5:37:15 PM
re: Time for a 4G Price War Already?

If carrier pricing affects Apple sales for the upcoming LTE phone, you can bet they will negotiate the price cieling before releasing the phone to which ever carrier they give it to. 

joset01 12/5/2012 | 5:37:14 PM
re: Time for a 4G Price War Already? Apple is the consumer's best friend. Bwahahahahaha. Seriously?
joset01 12/5/2012 | 5:37:13 PM
re: Time for a 4G Price War Already?

Apple's relationship with the carriers is much symbiotic. Gateway and Dell weren't subsidizing the crap out of home PCs for potential users.

gtchavan 12/5/2012 | 5:37:13 PM
re: Time for a 4G Price War Already? Much like intel in the 80s and 90s, that kept the price of flash and chip sets down in order to sell more processors at high prices, apple will keep the price of service plans in check so they can sell hardware and apps and music.
joset01 12/5/2012 | 5:37:12 PM
re: Time for a 4G Price War Already?

Well, it's happening...

paolo.franzoi 12/5/2012 | 5:37:11 PM
re: Time for a 4G Price War Already?

 


Dan,


It is a razor and razor blade thing.  The carriers whine like little girls about the costs of handsets.  The razor from their pricing is the handset and the monthly service charge is the razorblade.  They set up their pricing to return an ROI in less than the contract terms.  After that, the monthly charges are all gravy.  


Which is why all this stuff is silly.  We are not talking about IF the carriers make a profit but WHEN they make a profit and HOW BIG a profit it will be.  Compare that to an equipment maker who has to build a business that the question is WILL they make a profit?


So, the carriers have learned their lesson and are cranking up the cost of razor blades (data plans).  Don't expect that to change for a very long time. 


seven


 

Jameson14 12/5/2012 | 5:37:10 PM
re: Time for a 4G Price War Already?

I read your article and felt compelled to correct you.  The everything plan is $80.  What you didn't make clear is that the "sneaky" $10 premium data add on for smartphones is included in that price.  The same plan without a smartphone is only $70.  In fact, I believe Sprint is the only National Carrier that includes the price of data in their advertisements.  Beyond the $10 add on, there are absolutely no other charges.  Verizon and AT&T both make you purchase text and data in addition to the minute plan.  I'd say they're sneaky. 

joset01 12/5/2012 | 5:37:10 PM
re: Time for a 4G Price War Already?

Hi


 


I didn't get it wrong unless Sprint's shopping cart is completely screwed up.


Go on the site, say you're a new customer, pick out an iPhone and an $89.99 plan (or whatever) and follow it through to the end of the line. The $89.99 plan gets a $10.00 "premium data (required for this device)" service add-on.You pay $99 a month.


I tried this with various phones. It is actually hard to find a device that Sprint doesn't count as a smartphone but it definitely adds the $10 charge.


Now it may be that you're an existing customer so they haven't applied the charge. There's a faq on the Sprint community site about the conditions when it doesn't apply.


DJ

joset01 12/5/2012 | 5:37:09 PM
re: Time for a 4G Price War Already?

No, I agree there isn't much incentive for Verizon or AT&T to change. It would seem that Sprint and T-Mobile might have some incentive to break the model since they are stuck way behind the big two. I was reacting more as someone that uses smartphone data ALL THE TIME, I'm feeling like we have way less choice as consumers, not more.

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