AT&T, Verizon Wireless, and Deutsche Telekom's T-Mobile USA have announced flat-rate plans for unlimited calls in the United States, raising the possibility of a price war. Verizon Wireless, a venture of Verizon Communications and Vodafone Group, said Tuesday it had started offering unlimited calls for $99 a month.
AT&T followed with a similar plan, while T-Mobile USA went a step further by including unlimited texts and calls for the same price.
While the new offers are not likely to make a noticeable dent in the operators' average service revenue, analysts said investors are concerned that they will trigger further price cuts that will hurt profit and revenue across the industry.
The actions put pressure on Sprint Nextel, the No. 3 U.S. wireless service, to match the plans or risk customers defecting, analysts said.
"I think this increases the potential for an all-out pricing war," said Stanford Group analyst Michael Nelson.
He said the plans are likely to prompt high-spending customers to downgrade their plans rather than encourage customers to upgrade to unlimited plans.
About 85 percent of U.S. consumers have cell phones, which is increasing pressure on service providers to maintain growth rates.
Sprint Nextel spokeswoman Leigh Horner said the company is continuously evaluating its plans but declined to comment on specifics. She noted that Sprint was testing plans in four markets with unlimited voice, text, and Web access for $119 and $149 per month.
Analysts said they expect a minimal immediate impact on Verizon Wireless' average revenue per user because only a small percentage of its customers spend more than $100 a month on phone calls. Verizon Wireless's average revenue per user for retail customers was $51.59 in the fourth quarter, compared with $50.28 at AT&T.
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