Source: The Wall Street Journal
After years of waging a price war, the largest US wireless carriers reversed course and are adopting a series of changes that in many cases raise costs and reduce consumers' options.
The latest move came Tuesday, when Verizon Wireless introduced its biggest overhaul of pricing in years, with plans that let customers share data allotments among as many as 10 devices under a single account.
The approach could save heavy users money as they attach phones, tablets and laptops to Verizon's network. But it also does away with the carrier's cheapest plans for new smartphone customers and pressures subscribers to give up their unlimited data packages when they upgrade to new phones.
AT&T has signaled its interest in similar plans and is expected to follow Verizon's lead. The shift follows other steps in which carriers imposed higher costs or restrictive conditions on their subscribers, including longer waiting periods before they can trade up to new phones and fees for those upgrades.
"Verizon's pricing that they announced this morning is exactly what we have been kind of signaling in the marketplace for the last couple of weeks," AT&T Chief Executive Randall Stephenson said at an event in Washington on Tuesday.
The carriers are responding to the sea change in their industry's economics brought about by smartphones, especially Apple's iPhone.
Carriers are paying heavily to subsidize these devices, which in turn have users relying more on services like email, Facebook and Twitter at the expense of voice calling and texts -- the industry's longtime cash cow. The surge in wireless data use also forced the carriers to invest billions of dollars in expensive new networks.
Carriers' success in pushing through new costs for consumers underscores the heightened pricing power of the biggest phone companies in an increasingly concentrated industry, where Verizon and AT&T account for roughly two-thirds of subscribers and the bulk of the profits.
Regulators have expressed growing concerns about concentration in the wireless industry, shooting down AT&T's proposed $39 billion takeover of T-Mobile USA because of worries that further consolidation could lead to higher prices.
Read More: Verizon overhauls wireless price plans