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Brace Yourself for Higher Cellphone Bills This Year

February 9, 2018

The moves come after both companies in November abandoned plans to merge after months of talks. The aborted consolidation attempt meant the U.S. will continue to have four nationwide wireless carriers vying for customers’ wallets, at least for the foreseeable future.

 

The market leaders, Verizon Communications Inc. VZ -3.86% and AT&T Inc., T -3.68%have responded to smaller rivals’ promotions by offering unlimited data plans, which muted an important marketing message for T-Mobile. AT&T has also hawked bundles of its wireless plans with television services it owns.

 

There were signs earlier last year that the wireless industry might dial back its aggressive pursuit of new customers. Carriers decided to avoid offering free iPhones to customers trading in old models after maker Apple Inc. released even more expensive devices. Sprint Chief Executive Marcelo Claure said at the time he would prefer that manufacturers pick up more of the tab for customers’ hardware.

 

The plateauing prices come a year after promotions became so aggressive the Federal Reserve said falling wireless prices might have contributed to low inflation.  

 

Mr. Claure recently said the company won’t act as aggressively when customers’ promotional offers expire because the service’s quality is improving.

 

“We’re going to have a lot of room to increase our price of unlimited to get to similar prices as Verizon and AT&T in the future,” the Sprint CEO said last week in a call with analysts. “You get that by having an amazing network.”

 

This wouldn’t be the first time wireless companies have promised investors they would be more judicious with promotions, only to fold when competition heats up.

 

AT&T last year offered a buy-one-get-one free iPhone promotion that added to costs but helped fuel a stronger-than-expected gain of 329,000 postpaid phone customers. Wireless companies tend to prefer those subscribers who pay after using monthly service, rather than ahead of time, because they tend to stay customers for longer.

—Ryan Knutson contributed to this article.

 

Source: TheWallStreetJournal.com

 

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