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Cell phone giants roll out deals for big-time talkers

Unlimited calls, flat fees may spark a price war.

By Madhusmita Bora, Times Staff Writer
Published February 20, 2008

Uber cell phone users, here's some good news ringing your way.

Wireless giant Verizon on Tuesday debuted an unlimited, nationwide all-you-can-talk plan for a flat fee of $99.99 a month, triggering a quick reaction from rivals AT&T and T-Mobile, which jumped in with similar deals. T-Mobile stole the thunder later in the day by adding unlimited texting to its package that launches Thursday. AT&T's deal takes effect Friday.

The announcements unveil a new chapter for the U.S. wireless industry and could eventually trigger a price war between the wireless companies.

Unlimited calling, a popular phenomenon in some Asian and European countries, has had trouble making its mark in the U.S. market, except for the prepaid cell phone industry. Last year Sprint led the way by announcing an unlimited calling package for select test markets such as Tampa Bay, San Francisco and Philadelphia. But Verizon trumped its rival by going national.

"This is setting the floor for a new direction in mobile voice minutes," said Neil Strother, an analyst with Jupiter Research. "Over time, I am assuming prices will come down."

Yesterday's news is especially significant for Floridians.

"There's tremendous amount of voice usage here," said Chuck Hamby, spokesman for Verizon Wireless. "Customers across Florida have told us that this unlimited plan would provide a lot of value to them."

The momentum toward flat plans didn't surprise analysts, who have called it inevitable. But what caught experts off guard is the timing. AT&T and Verizon have been steadily picking up customers and revenues, and a bulk of the money they make comes from voice chats. Verizon, in particular, is known for putting a premium on its plans.

"They (Verizon) had said that about 15 percent of their customers are interested in something like this," said Lewis Ward, research manager of mobile consumer services at IDC.

Julie Ask, an analyst at Jupiter Research, said perhaps the move was to lure high usage customers from rivals and consumers who split their loyalties between land lines and cell phones. But it would have little effect on the prepaid market, Strother said.

Not everyone was impressed by Tuesday's announcement.

"You have to be doing a lot of talking for $1,200 a year," said Jim Barry, spokesman for the Consumer Electronics Association. "This is a niche product only for high volume users."

Brent Britton, a lawyer at the Tampa office of Squire Sanders & Dempsey, and an AT&T customer, agrees.

"While I applaud the effort, I am not sure I see the utility," he said.

Wall Street, too, sniffed at the announcement, sending shares of Verizon Communications Inc., down almost 7 percent to $35.34. AT&T Inc.'s shares dipped 5 percent, to close at $35.89. T-Mobile USA , a unit of Deutsche Telekom AG, saw a 4 cent slip in shares.

Madhusmita Bora can be reached at mbora@sptimes.com or (813) 225-3112.

[Last modified February 20, 2008, 01:00:55]