Why Unlimited Mobile-to-Mobile Calling is Evidence of a Lack of Wireless Competition


Today AT&T announced that it was offering a new feature to some of its subscribers: unlimited calling to any mobile number.  This comes after the news that they were also offering free microcells  (little boxes that boost reception in your home) to some iPhone users, and that Verizon was offering unlimited wireless data to its own iPhone subscribers.  Why is this flood of enticements evidence that there is not very much competition between wireless companies?

Because it took the move of the iPhone to Verizon to unleash them.  These enticements are being rolled out quickly with almost reckless abandon.  That suggests that there is not some new economy of scale or other efficiency that allows Verizon and AT&T to start offering these deals.  Instead, for the first time in years, AT&T and Verizon feel the need to actually compete with each other.  During this interregnum Verizon and AT&T are taking a break from their usual fat profits and are actually fighting it out for customers.

There is a bit of evidence that this won’t last forever.  Verizon’s offer of unlimited data is only for a “limited time.”  It is probably a safe bet to assume that the “limited time” will end just about the time Verizon feels that it has locked enough people into 2 year iPhone contract to feel comfortable.  AT&T’s unlimited mobile-to-mobile calling also has a catch – you need to subscribe to an unlimited text messaging plan (the pricing of which we have discussed previously) and take the extra step of activating the feature by going to a website.

This burst of competition is not a bad thing.  It is just unfortuante that it feels exciting and novel because we are so unfamiliar with it.  

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