February 19th, 2008
AT&T matches Verizon (T-Mobile follows): Welcome to the wireless price wars
Updated: Verizon Wireless announces a $99.99 a month unlimited wireless access plan and AT&T matches it just a few hours later in a move that almost resembles something you’d see in the airline industry.
First, Verizon Wireless announced Tuesday that it will immediately offer nationwide anytime wireless minutes in the U.S. for $99.99 a month. It also launched two tiers of BroadbandAccess plans starting on March 2. The plans will run $39.99 a month for 50 MB of data usage or $59.99 a month for 5 GB of data usage.
Verizon’s move got a good amount of attention on Techmeme, but just a few hours later AT&T matched Verizon’s $99.99 a month plan starting Feb. 22. In a statement AT&T said it is delivering value and simplified pricing, but also noted “this is a highly competitive market.”
Update: T-Mobile has already matched. In a statement emailed to me the company said: “To help our customers stick together with those who matter most, and to provide the utmost value to our customers, T-Mobile today is announcing a new rate plan featuring unlimited voice and unlimited messaging for just $99.99. This offer will be available beginning Thursday, February 21.”
This behavior, which is great for consumers, raises more than a few questions. Among them:
- Is a slowing economy pushing a wireless price war? A potential recession must be in these carriers’ models if they are matching price cuts in hours. And a battle on price between AT&T and Verizon Wireless can only spell doom for smaller carriers like Sprint and T-Mobile.
- What did demand for wireless services look like in January and February? Something pushed Verizon and AT&T to move pronto with these plans. Both carriers have been kicking around this flat-rate concept for more than a year.
- What’s next? Other carriers are likely to match. You can almost hear the pricing power diminish among wireless carriers. Let’s say you have one of these new flat rate plans for $99 a month. That’s still more than $1,200 a year once you include taxes and other fees. Bottom line: Wireless access prices could come down more. Toss in worries about your mortgage, credit card debts and car payments and it doesn’t take a genius to figure out this wireless price war may just be getting started.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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