Report: Carriers to replace buckets of minutes with unlimited calling
The nations' Tier 1 carriers are increasingly toying with the idea of getting rid of options that allow customers to have tiered voice minute packages in favor of a flat rate for unlimited calling, according to a report in the Wall Street Journal.
Although no concrete plans have been introduced, and the carriers have not said when they might make the shift, they certainly seem to be angling in that direction. The shift comes as voice usage continues to decline in favor of data, and as Internet-based calling services gain traction in the age of smartphone applications.
Carriers argue that moving toward a flat rate for unlimited calling will give customers simplified options, but the net effect will be to retain revenue from voice, which despite rising data usage remains the bulk of customers' bills. Most top wireless carriers already offer unlimited calling options, but they also offer buckets of minutes. Some, though, are moving toward the unlimited scenario more quickly--Sprint Nextel, for example, for years has been pushing its Simply Everything unlimited voice and data plan.
"The industry's definitely moving towards unlimited [voice calling]," AT&T Mobility CEO Ralph de la Vega told the Journal. "Especially as more people adopt smartphones that have voice capabilities over the Internet, segmented voice plans will become less relevant."
Additionally, the shift comes as carriers are moving toward Voice over LTE technology, which will render voice as simply one more data application among the many that customers can choose from. Brian Higgins, Verizon Wireless's vice president for product development, told the Journal that carriers want to get as much value out of voice, which has stagnated as a business.
"There are limits to what you can do with the voice product," he said. "It makes sense to look at the pricing."
The flat-rate scheme for calling has been pioneered by prepaid carriers Leap Wireless (NASDAQ:LEAP) and MetroPCS (NYSE:PCS), which have made flat-rate unlimited voice a core part of their offering for years.
While data represents a growing portion of carriers' revenues, data revenues remain dwarfed by revenues from voice. Industry wide, voice accounts for two-thirds of carriers' revenues.
Current Analysis analyst William Ho said the pace of the transition to flat-rate calling will vary from carrier to carrier, but that it will likely be dependent upon how quickly the operators can get the infrastructure in place to support VoLTE. Additionally, he said it will depend upon how quickly the carriers want to migrate customers off of legacy voice systems.
- see this WSJ article (sub. req.)
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