Before we get into it, ponder this: Wireless phone users worldwide will outnumber landline customers 3-to-1 by 2009, according to IBD story on 2/29/08.
Now that I have your attention, I’ve been writing about unlimited plans for some time. Last month, VZW, AT&T and T-Mo rolled out unlimited voice plans for $99. Last week, Sprint responded (sort of) with an $89 unlimited voice plan, and a $99 “Kitchen Sink” plan, which threw in everything but the Kitchen Sink for another $10 — data, messaging, e-mail, web access, TV, music, navigation, push-to-talk, everything. (Talk about devaluing these services!)
In my return as a Regular Contributor to Telephony, my latest commentary addresses this issue. Check it out at: http://telephonyonline.com/commentary/contributed/unlimited-voice-plans-030308/
Later today, UBS’ telecoms analyst John Hodulik who does the quarterly, must-read Wireless 411 Reports, described the AT&T’s “bullish” management meeting last week. John summarizes AT&T’s unlimited plan:
AT&T's new, flat-rate plan has only been available for less than 2 weeks and management does not expect it be able to gauge its impact on the segment for another month or so. That being said, in the two weeks the new pricing has been in the market its "been kind of a yawn," with little impact. While the sample is very small, more customers have bought up than have bought down.
And that’s the point of my Telephony piece: 99% of mobile customers don’t need $99 unlimited voice or kitchen-sink plans. These $99 plans are just the latest gimmick to sell users more than they need, while averaging up carrier ARPUs in the process. At $99, this is indeed a yawn, and less a revolution than a ploy to bring people into the stores, which apparently is working.
The underlying trend is far more important, as there’s a fundamental shift now underway from the Telecom Service Model to the Internet Service Model. Under the old Telecom Service Model, a carrier, handset, plan and features are selected and a long-term contract signed. The Internet Service Model replacing it includes always-on high speed data, flat-rate (non-usage sensitive) pricing, voice, data and a world of applications all running on an open platform, and a range of devices available. If this sounds like Open Access, you are right; the Internet Service Model is the platform, and flat rate pricing a big first step.
Please check out the TelephonyOnline piece, and look for more commentary to follow.
Well said, Whitey - I am in total agreement regarding the "yawn factor." They do offer some potential for future development, though.
When the plans were first introduced I immediately contacted my carrier (AT&T) because I've got four lines on my account in a family plan and, between the costs of the iPhone unlimited data plans for two phones and the additional line costs, my monthly bill is roughly $200. Cutting that in half would be appealing, but the plan only applies to individual users, not the entire family, which is understandable to a certain extent but disappointing on two levels.
The first level of disappointment is personal - it would be swell to save $1200/year. The second level of disappointment is that the wireless carriers still don't "get it." As you state, there are very few people who actually need an unlimited plan at $99. Take my wife and me, for example - we have a 2100 minute/month plan and rarely, if ever exceed 1500 minutes and feel like we're on the phone ALL the time. In fact, I recently eliminated my landline completely (watch my blog at TheWirelessWizard.com over the next few days for a detailed description of how that happened) and use my mobile for _everything_.
When carriers do "get it" they'll offer a $99 unlimited family plan - limited to the five lines that family plans are currently limited to - and include text messaging and data with it. Then they'll offer a plan with an additional $25 fee to cover broadband access provided over their EVDO/HSPDA networks so that people like me can have one broadband account instead of two (one for mobile devices and one for home).
This will put them in a position of strength to compete with cable companies "3-way" plays and make a compelling case for individuals or entire families going completely wireless. Sprint has come closest to this with their plan, but with such poor coverage and lousy customer service I don't know anyone who'd switch to them from VZW or AT&T - and certainly the $99 plans are being offered to switchers... there aren't any people left in the U.S. that need an unlimited talk plan and don't already have some kind of cellular service.
In short, this is a good start but unless the carriers go out on a limb by offering a truly compelling unlimited service they'll never be able to pick the ripest fruit: customers like me who would use wireless,switch broadband providers, drop landlines and become totally connected to (and thus more difficult to churn away from) my wireless carrier.
Just my 2 cents, of course. :-)
Posted by: Scott Goldman | March 04, 2008 at 07:38 AM