Uncommon Wisdom

Feb 19 2009   2:54PM GMT

T-Mobile to shake up prices; pressure mobile market

Tom Nolle Tom Nolle Profile: Tom Nolle

T-Mobile may be about to launch the Great Mobile Price War, with dramatic consequences for the whole market. The company is expected to announce a $50 per month unlimited usage plan, undercutting competitors by half and potentially further pressuring the monetization model for mobile services.

The issue here is a familiar one: Feature differentiation in voice and mobile services has not been successful in luring customers, and so price is the only option. Generally those with smaller market shares and thus more to gain are early movers in price cuts, and T-Mobile fits that mold.

If the company also links in premiums related to its FMC offering, the result could be to force operators to reduce costs and advance their FMC plans. That, we believe, might actually hurt 4G, IMS and traditional approaches simply because it constrains ROI and focuses on shorter-term objectives.

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