U.S Wireless Price War Leaves Consumers on the Losing Side

The U.S wireless market has become more competitive than ever and the average user's phone bills continue to increase as more data is being consumed.

Although carriers have decreased the prices of their services, bills are still increasing as more subscribers tend to avail of more expensive data plans.

Recently, T-Mobile raised the cost of their unlimited data plan saying that the move is to reduce other fees for service contracts and international data usage. This is expected to start a price war; however, T-Mobile executives do not see it as such.

"When you really analyze a lot of the pricing moves that have been made, there has not been a significant repricing," Chief Financial Officer Braxton Carter stated at a Morgan Stanley conference, as reported by Wall Street Journal.

Following T-Mobile's move, AT&T announced that it will decrease the price for unlimited text and voice messaging coupled with two gigabytes of wireless Internet. Similarly, last month, Verizon increased the data allocation for each of their subscribers to lower the cost of their data usage.

Although carriers are chopping the prices of plans for their consumers, the average monthly revenue gathered from each customer increased by 2.2 percent for the fourth quarter. According to New Street Research, this shows an increase of more than five dollars per subscriber from the first quarter of 2010 and since carriers do not subsidize phone purchases anymore, consumers end up paying higher phone bills. In the past, consumers enjoy the subsidy of recovering the costs of their phone bills after a two-year contract, however, carriers recently removed this subsidy.

Monthly fees are decreased but customers end up paying for their phones a monthly basis through carrier plans. The higher costs of smartphones and data usage reflect that Americans, on the average, are spending more on their phone bills.

'"When it comes to the monthly prices that people pay, those continue to go up," policy director at public advocacy group Free Press, Matt Wood said to WSJ. "It has gotten a little more competitive lately, but it isn't effectively competitive yet where the big two have to lower prices."

However, representatives from AT&T and Verizon noted that the competition is beyond price. According to them, they also have to compete for better network coverage.

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