Verizon - AT&T "Price War" May Cost You

Customers of Verizon and AT&T--the two largest wireless service providers in the United States, accounting for the vast majority of mobile service users--have reason to celebrate! Both wireless providers have announced price cuts in what appears to be the beginning of a price war. Don't uncork the champagne just yet, though. The losers of this war may be the customers.

It's like a stage magician trick. You are so focused on the hand showing you cards and making grand gestures that you don't pay attention to the other hand. Then, Voila! The deck of cards turns into a dove and everyone is amazed.

The price "cuts" are actually more of a price "realignment" in a sort of pricing sleight-of-hand that allows both Verizon and AT&T to capture headlines with announcements of price cuts, while actually boosting revenue in the process.

Verizon and AT&T both cut the price of their unlimited voice plans, bringing the combined cost of unlimited voice and unlimited data to under $100. AT&T followed the unlimited voice price cut by eliminating the Nation 1350 plan which provided 1350 voice minutes per month plus unlimited data for $110 per month.

For some, the price cuts will actually result in lower bills, or getting more voice, data, or text messaging for the same money. Don't be fooled into thinking that it's a real price war, though, or that either wireless provider is being charitable or altruistic in any way.

The cuts in voice pricing were offset with new data plan requirements. Customers with mid-grade phones--feature phones that have data capabilities, but aren't really smartphones--will now be required to purchase data plans in conjunction with the voice service. The net result is more revenue flowing in to Verizon and AT&T from customers who didn't want the data plan and are unlikely to get much use out of it.

Stop and think about the "unlimited" voice plan anyway. The "unlimited" concept is equivalent to those all-you-can-eat buffet chains. They charge you ten dollars for food that is mediocre at best under the premise that you can eat as much of it as you want. However, because the food quality is low and it is prepared in large quantities, very few people can ever hope to achieve actually eating their money's worth.

Both Verizon and AT&T already offer free calls between the 80 million-plus other subscribers on their own networks. They also both offer unlimited free calls on nights and weekends. Both providers also offer calling circles on certain voice plans that allow you to place unlimited free calls to any five numbers of your choosing. For AT&T customers, you can add in the fact that unused minutes roll over to the next month.

I will go out on a limb and say that the vast majority of wireless customers already call other customers on their same network, or frequently talk on nights and weekends, and that any calls that don't fit those criteria will fit comfortably into the calling circle. Basically, for 99.999 percent of wireless customers, any plan with a calling circle was already "unlimited" for all intents and purposes.

So, let's not give Verizon and AT&T too much credit here. First, they matched each other's pricing, which is more of a price stalemate than a price war. Second, even after the price cuts, neither of them are as cost effective as plans that have already been available from Sprint or T-Mobile.

Tony Bradley tweets as @Tony_BradleyPCW, and can be contacted at his Facebook page.

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