Marek’s Take: The complex world of wireless price plans

Marek's take

The complicated world of wireless price plans doesn’t seem to be getting any simpler. On one hand, unlimited data with no throttling and usage restrictions is becoming the standard – with all three operators – AT&T, Verizon and T-Mobile – enticing customers to upgrade to their highest tier 5G unlimited data plans.

To sweeten these offers, the operators are discounting 5G smartphones and bundling in streaming services and other add-ons. For example, AT&T offers a free subscription to HBOMax, Verizon includes Disney+ streaming service and T-Mobile gives customers free Netflix. Other benefits include extra hotspot data and security services.

But at the same time, AT&T and T-Mobile are quietly trying to lure consumers away from rivals with single-line 5G postpaid plans that are much cheaper than their brand-name unlimited plans.

For example, AT&T’s Unlimited Elite Plans are prominently displayed on the wireless operator’s web site. The Elite plans start at $65 per month for one line (including unlimited talk, text and data and 3 GB of hotspot data) and go as high as $85 per month (including unlimited talk, text and data and 40 GB of hotspot data). But the operator also offers a low-cost unlimited plan of just $50 per month. Called the Value Plus Plan, it is $15 cheaper than the AT&T’s lowest cost Elite unlimited plan. And to find this plan on AT&T’s web site, you have to search for it.

Like AT&T, T-Mobile highly promotes is Magenta unlimited plans on its web site. Its lowest cost Magenta plan is $60 per month and includes unlimited voice, data and text. However, T-Mobile does say it may throttle speeds for Essentials customers if they use more than 50 GB of data per month.

But T-Mobile also earlier this month introduced a new 5G postpaid plan, called Base Essentials, that doesn’t exactly fit into the unlimited category but it costs just $45 per month and comes with unlimited talk, text and data at 2G speeds and 20 GB of high-speed data (anything over that will be throttled). It also includes unlimited mobile hotspot data at 3G speeds.

Verizon so far is sticking with its existing unlimited 5G plans; it’s cheapest, called 5G Start, costs $70 per month for unlimited talk, text and data but the company says it may throttle data speeds during times of heavy traffic.

Testing the waters

So why are AT&T and T-Mobile testing the waters with these lower priced postpaid plans? It’s likely they want to see if they can attract price-conscious consumers, particularly those that may be tempted by the cable MVNOs and their low-priced 5G unlimited plans.

Wireless operators initially shrugged off competition from Xfinity Mobile, Spectrum Mobile and Optimum Mobile, but every quarter the cable players are taking more and more share away from the wireless operators. For example, in the first quarter of 2022, the three cable MVNOs attracted more postpaid phone net adds (703,000 total) than any of the three big wireless operators. AT&T had the most postpaid net phone adds for the quarter with 691,000 followed by T-Mobile with 589,000. Verizon, meanwhile, had a loss of 36,000 net postpaid phone customers.

Charter’s Spectrum Mobile MVNO made the most headway in 1Q with 373,000 postpaid net phone adds followed by Comcast’s Xfinity Mobile with 318,000. Altice’s Optimum Mobile is the laggard of the bunch with just 12,000 postpaid net adds but the company recently received a big feather in its cap when it was named the No. 1 in customer satisfaction among all the wireless service providers in the 2022 American Customer Satisfaction Index.

Of course, the time to start making these lower priced plans more visible to consumers is now, particularly as AT&T and Verizon have both confirmed that they plan to raise their prices in June. Verizon said that the adjustments are coming to defray costs of complying with regulatory requirements and that consumers will see an increase of nearly $2 a month in administrative charges. AT&T, meanwhile said it is raising the price on some of its older plans but up to $6 a month for single-line customers and up to $12 a month for families.

But wireless operators have the tricky task of figuring out how to balance the needs of price-conscious consumers with their business needs that call for them to raise their prices to defray costs and keep up with inflation.

Wireless rate plans aren’t getting any simpler – at least not in the near future.