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Wireless World: Phone-Plan Competition Hot

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Chicago (UPI) June 3, 2005
Monthly mobile phone plans have become more competitive than ever, as carriers offer more minutes to consumers for the same or less money, but increase their profits by selling expensive innovative features as extras, experts told UPI's Wireless World.

This is what people can continue to expect "as fallout from the big cellular mergers," said Derek Kerton, a wireless industry consultant.

The mergers, such as that of Sprint and Nextel -- which is expected to be approved by the Federal Communications Commission later this year -- as well as earlier deals, have remade the mobile marketplace, making it more national and less regional than ever before.

"The trend of the five national providers is away from regional plans to almost exclusively offering national plans," said Allan Keiter, president and founder of MyRatePlan.com in Atlanta, a firm that tracks the wireless industry. "Customers like these plans because they offer more price certainty -- (that is), no roaming charges."

Typical is the deal announced this week by Qwest Communications International Inc. The company expanded availability of its nationwide wireless service to residential and small-business customers in Keokuk and Mason City, Iowa. For the first time, residents there can choose Qwest Wireless for competitive national-service calling plans.

Qwest's nationwide plans start as low as $39.99 for 500 weekday minutes, with free calls to the Qwest home phone on the account.

Cingular also began offering a new national wireless pricing plan this week. "They've basically lined themselves up with Verizon now, with the only significant difference being that Cingular offers roll-over minutes," Keiter said.

The most competitive carrier at the moment seems to be T-Mobile.

"T-Mobile remains the most aggressive with pricing, including a current promotion of $45.99 for 1,000 minutes plus free nights and weekends," said Keiter. "T-Mobile is also the only carrier of any size that continues to make it easy to sign a one-year contract vs. a two-year deal."

Carriers are increasing the amount of "group rates" they offer as a creative inducement to get people to encourage their family members to sign up for the same mobile service.

"Group-based rate plans -- your family is free, your industry vertical is free, et cetera," said George-Gonzalez Rivas, a managing consultant with PA Consulting Group in New York City, which tracks telecom issues.

Rivas said he expects to see wireless carriers offer "price interactions," which he describes as "discounts across services." That is, if someone buys a number of ring tones, they may receive a discount on his or her calling plan.

"The goal here is to raise the average revenue per subscriber in a flat-pricing environment," Keiter said. "Where there used to be a $39.99, $49.99 and $59.99 rate plans, the $49.99 is now gone."

Though consumers have more minutes for their money, they are increasing their overall bills by buying the ring tone services and playing games on their mobile phones.

"The search for the next ringtone" is on, Rivas said. "What other easy products with huge margins exist?"

Among the possibilities, he said, were celebrity voice messages or caller tones, or even auto-detect voicemail responses. All may be on tap for the major mobile carriers.

Also hot: location-based services that connect to people nearby on the bus or train and asking them, via the phone, if they want to play, chat or go out on a date.

Developers such as m-Cube in Boston are developing content for mobile phones that provide personalized sports scores.

"We recognize the growing importance for sports franchises and networks to engage the wireless channel to monetize their content, enhance team loyalty and promote merchandise and ticket sales," said Jeffrey Glass, chief executive officer of m-Cube, which is working with Major League Baseball on mobile content for fans.

Such services are expected to generate $126 billion per year in the next three years, according to research by ARC Group.

Overall, wireless continues to grow swiftly. Sprint and Nextel added 2.1 million new customers in the first quarter of this year, exceeding the growth of Cingular and Verizon, which until then had been the pacesetters, said Gary Forsee, the chairman and CEO of Sprint, during a conference in New York City sponsored by the investment bank Sanford C. Bernstein & Co.

Meanwhile, demand for pre-paid wireless phones in the United States will increase by 20 percent over the next four years, according to Atlantic-ACM, a market-research firm in Boston. A new report by the company forecasts most of the growth will come from hybrid plans, which allow users to top up their available call units automatically by credit card.

Another sector poised for growth is mobile virtual network operators, or MVNOs, which do not own a network infrastructure. Rather, they maintain business agreements with traditional mobile operators to buy minutes for sale to their own customers.

The Atlantic-ACM report said MVNOs by 2009 will provide the minutes for nearly four of every five prepaid wireless subscribers.

There is some concern among telecom experts that companies may feel a "gadget backlash" in the coming years, as consumers demand more operability from their phones.

"Who wants a phone that's just a phone?" Rivas asked.

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