The prepaid wireless market has turned into a game of limbo: How low can it go?
MetroPCS today lowered the price of its monthly unlimited plan to $40 for limitless voice, texting and Web access. The carrier also said that its $45 plan will now include unlimited email, navigation and social networking applications (in addition to unlimited voice, texting and Web access). Both plans represent a $5 cut in pricing. The company is maintaining the price of its $50 plan for smartphones that gives subscribers complete HTML Web browsing and enterprise email access.
The new $40 plan undercuts TracFone Wireless' $45 unlimited plan, which was the previous floor price for unlimited prepaid plans. TracFone's Straight Talk plan offers unlimited voice, text messaging and 30 MB of data and runs on Verizon Wireless' network. Thus, the new MetroPCS plan is a further indication that competition in the prepaid market is intensifying.
MetroPCS' move startled some analysts.
"We are surprised that MetroPCS would have moved this quickly to adjust its pricing as we believe that business has generally been fine so far, but they might be trying to pre-empt the new competitors," Pali Research analyst Walter Piecyk wrote in a blog post. "These actions support our estimate of declining ARPU for 2010 compared to consensus which we believe shows little or no decline in ARPU in that more competitive year."
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