Sprint CFO Robbiati: Unlimited war 'probably not' sustainable

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Carriers have consistently sweetened their unlimited offers by lowering prices and adding perks. But the fight to provide unlimited data at ever-lower prices can’t continue, Sprint CFO Tarek Robbiati said.

The recent war over unlimited data probably isn’t sustainable at the price points carriers are currently offering, Sprint CFO Tarek Robbiati said Tuesday. But that model isn’t likely to change soon.

T-Mobile and Sprint launched the first salvos nearly simultaneously last August when they introduced so-called unlimited data plans, sparking a war between the nation’s largest carriers that has escalated significantly in recent months. Verizon finally joined the battle a few weeks ago, and AT&T said just a few days later that it was expanding its unlimited offering to all customers after limiting it exclusively to subscribers of its DirecTV service.

Those carriers have consistently sweetened their unlimited offers by lowering prices and adding perks like HD video and data allotments for hotspot usage, and last week the battle expanded to the prepaid market.

But the fight to provide unlimited data at ever-lower prices can’t continue, Robbiati said.

“It has to be said in the longer run, is unlimited a sustainable proposition?” he asked during an investors' conference Tuesday. “Probably not. … The one thing that is unavoidable is the expense incurred in deploying capex, which is behind the need for capacity. Over time, unlimited will have to involve price increases.”

Robbiati reiterated Sprint’s claim that its sizable spectrum portfolio provides an opportunity to increase capacity more cheaply than its rivals can, however. Sprint continues to tout the advantages of its high-band airwaves, which don’t propagate as effectively as lower bands but can transmit significantly more data.

“When the market goes to unlimited, it’s not necessarily a race to the bottom, as some people have described it, it’s more a race toward building capacity,” he said. “When you have to race to build capacity you have to exploit the means that you have, and when you have a lot of spectrum,” capacity can be increased relatively affordably.

Regardless, rate hikes for unlimited services aren’t likely to happen in the near term, because competition in the wireless market will only increase as cable companies such as Comcast and Charter elbow their way onto the field. The combination of next-generation technologies and unlicensed spectrum provides opportunities for cable companies to use networks of Wi-Fi hotspots to provide wireless services without building out the kind of nationwide cellular networks that traditional carriers operate, Robbiati suggested.

“If you walk down the street and you have your phone activated for Wi-Fi, it’s quite possible if you are a cable user that you can attach to a router that is powered by your cable provider even if you are not in your own home,” he said. “We don’t see (cable companies) as an adjacent industry, we see them as playing part of the same industry we’re operating in. And that is an industry where multiple players—about 14 or 15 of them—are competing for the distribution of content and services, and the one thing that they have in common is a platform. And those platforms can take different shapes” including networks built on fiber, cable, wireless or even satellite connections.