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Verizon Wireless-AT&T 'price war' cuts voice costs, increases data plan prices

January 20th, 2010 12:00 am by Staff Report

BusinessWeek is reporting that the two biggest U.S. mobile-phone companies said on Jan. 15 they'll cut monthly prices on unlimited voice calling packages by $30, but the bigger picture equals a rate increase.

While the decreases make voice calling cheaper, they and other price moves announced the same day are designed to get subscribers to opt for data plans that typically carry higher price tags and fatter margins for mobile-phone service providers. So the net effect may be increased revenue, analysts say.

Verizon Wireless, for example, may sacrifice $540 million in voice revenue while generating an additional $630 million in data plan sales, according to Credit Suisse (CS) analyst Jonathan Chaplin. Only about 2% of wireless subscribers will see lower bills as a result of the price changes, according to estimates by JPMorgan (JPM). Effective Jan. 18, Verizon Wireless and AT&T will charge about $70 apiece for unlimited voice calls.

In some cases, lower prices on voice plans may make users more comfortable paying the extra fees for data plans. At the same time, the carriers introduced policies designed to encourage customers to sign up for non-voice services from the get-go. New AT&T customers who buy certain non-smartphone devices, for instance, will now be required to spend at least $20 a month on unlimited texting or data plans. Those customers weren't required to buy data plans before.

Read the full report at the BusinessWeek Web site.

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