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Analysts Believe Promotions Do Not Indicate A Price War

February 8, 2016 - Written By Daniel Fuller

Carrier price wars can be a double-edged sword. In an era where MVNOs are coming into their own just as truly unlimited high-speed data plans are beginning to make a comeback, some may say that’s exactly what’s set to happen, if not already happening. Aggressive promotions are coming out of the woodwork from just about every carrier. This goes hand in hand with recent hype over network performance, both overall and at the recent Super Bowl 50 at Levi Stadium. With the upcoming spectrum auction in March and the possibilities of 5G networks looming overhead, profits are more important than ever for carriers. Current promotions, for the most part, have carriers playing a dangerous game by trading ARPU, or average revenue per subscriber, for new signups and existing customer loyalty.

Speaking on the matter in a report, Pacific Crest said as much. “While historically a slow month, January did exhibit some strategic promotional activity from the carriers… Unlimited data plans are taking the lead on the promotional side, and we do not believe an overall price war is occurring. Pricing changes by carriers should be viewed as strategic attempts to gain subscribers while their competitors’ backs are turned.” The cutthroat wording may seem to have some spin to it, but it’s quite clear that some of these promotions are aimed directly at rivals. Publicity stunts aimed at showing up or shaming rival carriers have been commonplace as well, especially consider the Super Bowl. T-Mobile’s #BallBusterChallenge and Sprint’s #SuperBold50 come to mind.

Currently on offer are Sprint’s half-off deal porting in from another member of the Big 4 and their $200 off trade-in deal on the Galaxy Note 5 and Galaxy S6, as well as T-Mobile’s controversial BingeOn and more recent Tablet On Us promotion for Valentine’s Day. They’re also offering a $150 deal on four lines. Verizon, meanwhile, is opting to go the value-added route with free Go90 streaming for subscribers, while AT&T is offering fully unlimited plans to tie in with their TV services, as well as buy-one-get-one deals for business customers. These promotions and fairly low prices may point to a price war all but decisively, but according to research firm Pacific Crest, no such thing is happening.