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US mobile market set to change significantly in 2008 with a move towards flat voice tariffs

Germany(prwindow)- May 20 2008 -The US mobile market is set to change significantly in 2008, with the move of local incumbents, AT&T Mobility and Verizon Wireless, towards a flat voice tariff model in 1Q08..
The US mobile market is set to change significantly in 2008, with the move of local incumbents, AT&T Mobility and Verizon Wireless, towards a flat voice tariff model in 1Q08. In February 2008, AT&T Mobility, Verizon Wireless, T-Mobile USA and Sprint Nextel introduced a flat voice tariff for mobile calls to all domestic mobile networks and fixed lines at a monthly rate of $99. Verizon Wireless, which was first to launch the new tariff, admits that the tariff is primarily meant for a niche of high-volume mobile users. The cost of the new tariff, however, is expected to decrease within the year as competition intensifies among the top mobile players, making the tariff a viable option to the mass market.

Research by InfoCom on this topic has shown that in Germany, for instance, mobile operators offer similar tariff models. However, in other Western European countries, such as in France, Italy or Spain, such flat tariffs tend to be limited to a certain call number or a period of the day or week. In the UK, flat voice tariffs are generally restricted to calls made in the mobile operators’ own network.

The US remain an attractive mobile market, with significant room for growth and an estimated mobile penetration rate of only 83.3% in 2007, to reach 85% by end-2008. Compared to 2006, both top-players recorded double digit revenues increase: AT&T Mobility recorded an increase in mobile service revenues by about 15% to $38.7bn in 2007, while Verizon Wireless recorded an increase of about 16% to $38.0bn. The revenue growth was paired by a significant enlargement of their subscriber base, with a plus of 15% and 11%, to 70.1mn and 65.7mn, respectively. The flat voice tariff model should help further sustain the growth of the subscriber base and push mobile traffic volume, although it will intensify pressure on margin generation, which could be crucial in the long-term.

While the US tariffs landscape is changing, over the next years mobile broadband usage is also due to increase. However, unlike Europe, where mobile operators have generally adopted the same technology, the US mobile market is characterised by a large variety of different systems. While AT&T and T-Mobile’s 3G networks are based on UMTS, Verizon Wireless and Sprint Nextel deployed CDMA 2000 while Clearwire and, again, Sprint Nextel agreed to partner on the roll out of a WiMAX network. Cable operators are reckoned to be interested in WiMAX, supporting Clearwire/Sprint Nextel with the WiMAX rollout, as a way to integrate their triple-play offerings and, thus, compete with multiple-play offered by AT&T and Verizon.

About Mobile Broadband Report: Based on a best practice analysis in a significant number of countries, vendors & carriers, this research shows how operators search for opportunities through new applications.

About InfoCom
InfoCom is a market research and consultancy company with 20 years experience providing strategic analyses and planning assistance to stakeholders in the telecommunications, IT and multimedia industries. InfoCom’s independent and fact-based analyses highlight trends and opportunities, supporting decision makers to understand market dynamics in order to improve their competitive advantage.


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Aileen Brucal
Infocom GmbH
+49 711 870510-39

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