Wednesday, February 20, 2008

What's Next, $50 Unlimited?

With Verizon's annoucement yesterday of a $100 Unlimited voice plan, cellular corporate boardrooms are buzzing, and the stocks of the cellular carriers are slipping. While we salivate at the idea of new cellular price wars, we can't help but think of the downside: the loss of another cellular competitor.

There are rumors that Sprint and T-Mobile will need to not only meet Verizon's new unlimited plans, but may need to beat a healthy margin. Wireless analysts are hinting that these 2 carriers will need to drop to $60, or even $50 for Unlimited service to keep from losing customers. This could mean great news to some of us, but it also could mean the end of one of these companies. Sprint/Nextel, being the most vulnerable, may need to be the most aggressive. Sadly, the direction price wars take us is further consolidation. And if prices do fall to around $50, what happens to the carriers that already offer unlimited at that price like Cricket, Metro PCS and a handful of smaller companies? Cheaper plans? That can't be a bad thing, right?

Let's look beyond the dark clouds for now and enjoy the fact that prices are slipping downward. That may also mean bad news for wireline carriers who will lose more lines to wireless, but we are users, and we love competition. We'll be investors on another day. For now, Let Chicken Little go..."The ski is falling!"

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