Verizon lowers prices for cell phone plans
Verizon Wireless said Friday it will lower prices on its unlimited wireless plans, a move that is likely to spark a price battle between major wireless carriers. The service provider cut its unlimited family talk and text plan from $229.99 to $149.99 and its nationwide unlimited voice plan was reduced to $69.99 from $99.99. An unlimited family voice plan will cost users $119.99, down from $199.99, and nationwide unlimited talk and text plans were lowered to $89.99 from $119.99.
“Prices either stayed the same or were lowered for unlimited usage,” said Brenda Raney, a Verizon Wireless spokeswoman.
The lower prices will be offered Monday. Existing customer contracts will not be affected, but customers may switch over to any of the new plans without a penalty or contract extension. “Verizon has traditionally been able to maintain a premium for its services that has largely been carried on the strength of its network,” said Daniel Hays, wireless expert and partner at consultancy PRTM. “With this move, it seems to be an indication that the price war in the U.S. is heating up.”
Verizon (VZ)’s decision to slash prices is evidence that the company is experiencing a significant slow-down in subscriber growth, Hays said. And because its competitors don’t want to be left in the dust, he expects wireless service providers including Sprint Nextel (S), T-Mobile USA and its biggest rival, AT&T (T), to hop on the bandwagon. “AT&T has not traditionally been one to overreact to changes, but I would expect that in the coming months they will make some significant refinements to pricing.”
And Verizon’s smaller — but growing — competitors are likely to be even more affected by the price reductions. “This is going to put continued pressure on some of the smaller players like Leap Wireless (LEAP) and MetroPCS (PCS) who have really been taking the lead in this pricing competition,” Hays added. “They’re going to be the ones who are going to have primary impact.”
Prepaid plans: Verizon also said it will begin offering prepaid plans on Monday for $5 more a month than a typical contract. Hays said he wouldn’t be surprised if other carriers follow in Verizon’s footsteps because of the simplicity of this new option. “Verizon has clearly drawn a line in the sand about the premium to be paid by pre-paid users who operate without a contract,” he said. “A mere five dollars per month gains them freedom from contracts, but also requires that they bring their own device without the subsidies that dominate today’s wireless landscape.”