With significant moves towards “unlimited” mobile data usage plans by all four leading U.S. mobile service providers, it is worth asking “why?” and “why now?”
Keep in mind that for many customers--perhaps most, at T-Mobile US--there is no effective difference between an “unlimited” plan and a plan offering 6 GB or 10 GB of usage.
T-Mobile believes that more than 90 percent of current 6GB and 10GB customers are “effectively unlimited” because they do not exceed their allotted bucket. That is likely mostly true for customers on 6 GB to 10 GB plans at the other carriers as well.
On the other hand, the T-Mobile US “Binge On” plan that exempts streaming video from all usage plans already had effectively eliminated the most data-intensive apps from usage charges.
So why the price changes? Aside from the background of market share attacks by T-Mobile US and Sprint that largely are based on price, it might be worthwhile to note that there has been a shift to cut prices at the high end of plans, where monthly billings are highest.
AT&T eliminated the $20/300MB share plan and replaced it with a $30 for 1GB share plan.
Verizon eliminated the $30/1GB share plan and replaced it with a $35 for 2GB share plan.
T-Mobile’s new T-Mobile ONE unlimited plan eliminates all metered plans, including the lower priced and popular $65/6GB plan and the lowest priced $50/2GB plan.
The carriers are raising prices but also usage allowances.
Some might suggest the maturation of the smartphone and mobile data trend has something to do with the changes, as it is getting very difficult for Verizon and AT&T to sustain subscriber market share in the face of price attacks by T-Mobile US and Sprint.
If so, a shift to bigger plans and unlimited usage would be a way of increasing perceived value, while boosting average revenue per user metrics, the main way the carriers can boost revenue at a time when subscriber growth is capped. That explains the “why.”
But “why now?” It is possible that a recent move by AT&T to unlimited usage for customers who bundle DirecTV and mobile service was the precipitator. Attackers cannot allow leaders to move first in “adding value” if the attackers are positioned as the value leaders.
In that view, T-Mobile US and Sprint essentially had to shift to greater reliance on unlimited offers to keep their positioning in the market.
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| source: BTIG |
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