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US mobile users to experience price increases for first time in nearly 2 years

American’s cellphone bills are rising for the first time in nearly two years as wireless service providers pull back on promotions.

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Over the past two years, they have benefited from lower bills and unlimited data usage as national wireless providers have competed fiercely for new customers.

Sprint recently introduced new tiered-pricing for its unlimited data plans, following in the footsteps of AT&T , T-Mobile, and Verizon. Sprint’s new “Unlimited Basic” plan doesn’t offer a discount off of its existing unlimited plan despite removing or decreasing some of the features of the plan. In fact, some subscribers would see a price increase if they switched.

Both AT&T and Verizon have seen their wireless service revenues tank over the last few years as T-Mobile and Sprint put pressure on pricing. First, T-Mobile led the way by separating service and equipment billing. Then it introduced unlimited data plans. Both moves led to pressure on pricing.

We’re now over a full year past the introduction of Verizon’s unlimited data plan — the last major carrier to offer such a plan. And Verizon is starting to show signs of a turnaround in service revenue, as is AT&T to a lesser degree.

But a less competitive environment should enable Verizon and AT&T to really push that growth in service revenue higher. Both have already introduced updated data plan tiers in an effort to increase service revenues.

Here’s a breakdown of the monthly prices for unlimited data plans from each of the four major wireless carriers.

Carrier AT&T Sprint T-Mobile Verizon
Lines 1 Line 4 Lines 1 Line 4 Lines 1 Line 4 Lines 1 Line 4 Lines
Low Tier $70 $160 $60 $140 $70 $160 $75 $160
High Tier $80 $190 $70 $180 $80 $200 $95 $240
TABLE SOURCE: AUTHOR. DATA SOURCES: AT&T, SPRINT, T-MOBILE, VERIZON.

 

AT&T bundles a lot of extras with its unlimited plans, but it used the increased bundling as an excuse to raise its pricing. Verizon, notably, offers a mid-tier plan priced exactly halfway between its low and high tiers. Additionally, both T-Mobile and Verizon allow customers to mix and match unlimited plans across multi-line accounts, so there are a lot of variables at play.

Overall, average unlimited plan pricing is rising, and most low-tier unlimited plans are priced the same or higher than they were last year.

The trend will continue cellphone bills

There isn’t much in the way of continued price increases. T-Mobile and Sprint have agreed to merge pending regulatory approval. When the two companies combine, their need to attract new customers in order to leverage their fixed network operating costs will be greatly diminished.

Furthermore, Sprint can’t keep slashing prices and survive as a stand-alone company. If it wants to compete with Verizon and AT&T, it needs to build out its network, and it needs to increase its pricing in order to have the cash to build out the network. Sprint has been the most aggressive in terms of pricing, so its recent price change is a clear sign that it’s willing to sacrifice some subscriber growth in order to stay in the game long-term (if its deal with T-Mobile doesn’t work out).

Meanwhile, investors should expect Verizon and AT&T to keep finding ways to increase pricing. Verizon will rely on its superior brand and network to attract customers at higher prices, and AT&T will rely on bundling economics with its pay-TV and home internet packages.

The price increases may be hard to swallow for consumers, but if you hold stock in one of the carriers, it could ease the pain. cellphone bills

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