Would you pay $100 a month for wireless?
Posted
Feb 20 2008, 03:17 PM
by
Kim Peterson
Rating:
Price war! Two words consumers love to hear. In this case, the war is among wireless carriers unveiling unlimited calling plans for heavy phone users.
Verizon started it all by announcing a $100 plan for unlimited voice. AT&T and T-Mobile USA joined in with similarly-priced plans, but T-Mobile added text messaging as well.
That leaves everyone waiting to hear from Sprint, the last of the big four carriers. UBS telecom analyst John Hodulik thinks Sprint will undercut everyone with an unlimited plan priced at $60-$80 a month. Hodulik thinks Sprint will make the announcement in the next few weeks.
That's got Wall Street in a tizzy, and telecom stocks took a tumble today as analysts slashed their ratings and feared for tough times ahead. A Credit Suisse analyst downgraded the entire sector to "market weight" from "overweight," citing the price war and macroeconomic weakness.
Verizon shares fell today but began a remarkable climb this afternoon, closing down less than 1% to $35.20. AT&T shares dropped 4% to close at $34.29. Sprint shares fell nearly 6% to $8.71.
The big question is how exactly this price war will sway consumers. Most people don't pay anywhere near $100 for wireless service, opting for cheaper plans with limited minutes. Now that the prices of unlimited plans have dropped, will people upgrade so they can talk all they want? Or, will carriers see downgrades by high-spending customers, the ones who previously paid hundreds of dollars a month for unlimited service?
One analyst, Michael Nelson of the Stanford Group, said he thinks downgrades are more likely than upgrades. And that's what's got telecom investors nervous.
Would you want a $100 monthly wireless bill? That's a pretty steep price for the average wireless user. But at least you wouldn't have to worry about going over your minutes. Let me know in the comments.
