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Cell phone bills continue to rise despite illusion of a price war

Published Mar 12th, 2014 2:48PM EDT
Cell Phone Plan Comparison

It seems like there’s a different headline every week covering new cell phone service plans that offer subscribers more value for less money. AT&T and T-Mobile have been particularly aggressive in this regard, with each carrier having recently lowered the cost of various service plans several times in the past few months. But are subscribers actually benefiting from all these price cuts?

According to a recent report from The Wall Street Journal, wireless subscribers in the U.S. pay more for cell phone service each month now than ever before. A study conducted by New Street Research found that average monthly billings per user are actually continuing to climb despite the illusion of a “price war.”

The firm’s research suggests that average revenue per U.S. wireless subscriber climbed 2.2% to $61.15 in the fourth quarter last year. That figure is up $5.35 from the same quarter three years earlier, pointing to a steady rise despite the perception of increased price competition. Heavy smartphone sales have also played a big role in carriers’ increased billings, of course.

While the news that cell phone service revenue has actually climbed over the past few years seems curious when reconciled with various wireless marketing campaigns, even the carriers themselves admit that not much is actually changing.

“When you really analyze a lot of the pricing moves that have been made, there has not been a significant repricing,” T-Mobile’s CFO J. Braxton Carter admitted at Morgan Stanley’s technology conference last week.

Verizon CEO Lowell McAdam agrees. “I think it is interesting given my years in the industry, how you hear things like price war and all that being kicked around in the media today and this is really nothing different than we have seen over the last couple of decades,” McAdam said during Verizon’s most recent earnings call.

T-Mobile actually raised the cost of its unlimited smartphone plan late last week, and Verizon has for the most part stayed away from the ongoing “price war.”

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content.

Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment. His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.