Reasons Include Increased Competition, Improved Technology
Cell phone service prices are falling and consumers can expect more for their money, according to a study and providers.
While the average price of monthly service fell about 8 percent, San Diego customers experienced a 9.8 percent decrease in a six-month period ending in January, according to a study released by Econ One Research, Inc.
The Los Angeles-based economic research and consulting firm examined prices for the 25 largest cities in the United States. Only single-user plans posted on providers’ Web sites were examined. The company calculated a plan’s annual cost to determine the monthly price across four usage levels of 30, 150, 300 and 600 minutes.
AirTouch, GTE Wireless, Pacific Bell and Sprint PCS were the major local providers surveyed. Although Nextel communications is a major carrier, the company mainly offers multiple-user plans and was not included in the study.
Increased competition and improved technology are the driving forces behind falling prices, according to Charles Mahla, senior economist for Econ One.
– FCC Changes
Policy On Carriers
Until several years ago, the Federal Communications Commission only allowed two carriers in each market, he said.
Wireless providers were also required to post their prices with the Public Utilities Commission and alert their competitors prior to changing their prices, Mahla said.
While prices did fall over time, the conditions stifled major declines.
“One of the incentives of using price to compete is that you can catch your competitor off guard,” he said.
While the FCC still regulates the industry, currently there is no price regulation and competition has increased, he said.
Personal Communication Services (PCS) carriers have entered the market and the competition has helped to drive prices down more quickly, he said.
Sprint PCS is “extremely competitive in all markets,” said Tom Murphy, a company spokesman.
He claims Sprint is a “catalyst” that helps drive down prices whenever it enters a new market.
– Carriers Gain Ability
To Serve More People
Technological advances have also allowed carriers to serve more people, which have helped decrease prices as well, Mahla said.
Jenny Bourbiel, manager of advertising and public relations for GTE Wireless, agrees.
“As technology advances, the price of technology goes down,” she said.
GTE passes savings onto the customer when it can streamline costs, Bourbiel said.
Pacific Bell Wireless is always trying to find ways to improve affordability, according to Brian Brokowski, a company spokesman.
“We’re always looking for ways to improve our service and to make our calling plans affordable and more effective for callers,” Brokowski said, adding they try to offer a variety of calling plans.
– Some Locals Need
Larger Calling Plans
AirTouch has found San Diego customers require larger calling plans, which are cheaper per the minute than smaller plans, according to Jim Naughton, company manager of regional pricing.
“Rather than being the low-cost leader , and we’ll never be the low-cost leader , we’d like to provide more value for a given price point,” Naughton said.
In addition to decreased prices, customers should begin to see “value-added services” increase, Naughton said, adding that both will eventually level off.
Mahla also believes prices will continue to drop and eventually level off.
“The price declines won’t continue forever, but what we will likely see are enhanced service offerings. In effect, the price is going down because people are getting more for their dollars,” Mahla said.
Already local carriers provide services that include voicemail, pager services, caller identification, call forwarding, call waiting, conference calling, free or reduced minutes, and others.
– Several Providers
Offer Internet Service
Several providers are also starting to offer wireless Internet service.
While the study focused on individual consumer plans, business customers are not being left behind.
While several carriers said specific usage is not tracked, it is believed many customers use wireless service for more than just personal use.
“Most people probably use it for a mix of personal and business uses,” said Brokowski, adding that Pacific Bell’s customers reflect a growing and diverse base of users throughout the industry.
Nextel, which offers plans designed for businesses, is trying to give clients more for their money as well, said Susan Rosenberg, a company spokeswoman.
The company incorporates services such as paging, walkie-talkie-type service and other ways of communicating, she said.