What’s Good For T-Mobile Might Not Be Good For Everyone

With T-Mobile USA deciding to exit the contract/phone-subsidy parts of the traditional wireless marketplace (CTDaily, 03/25/13), the competition is watching closely, says Fitch Ratings. “We believe the pricing of rate plans when going the unsubsidized route is crucial when it comes to impacting margins for wireless carriers,” the company says. “If operators price the plans too low, margins would bepressured. If the plans are priced too high, subscribers would not realize value from unsubsidized plans relative to traditional rate plans.” Fitch predicts neither AT&T nor Verizon will make any quick moves along this line because “it would not be accretive to their margins.” And subscribers appear to be hesitant. “Doing away with the subsidy model, while supportive of the carriers’ margins, does not appear to be something consumers are rushing to get away from,” Fitch points out. In the longer term, wireless carriers hope competition among smartphone OSSs (iOS, Android, Windows) will reduce smartphone costs,thus lowering the dollar amount of subsidies.