The Cellular Market in the $99 DaysThe Cellular Market in the $99 Days

It must be an off month in mobility, because the biggest thing we have to talk about is money. In particular, it's the new spate of $99 per month unlimited use cellular plans. Verizon started the ball rolling but AT&T Wireless responded in about a day, and soon thereafter Sprint, T-Mobile, and even regional operator US Cellular jumped in.

It must be an off month in mobility, because the biggest thing we have to talk about is money. In particular, it's the new spate of $99 per month unlimited use cellular plans. Verizon started the ball rolling but AT&T Wireless responded in about a day, and soon thereafter Sprint, T-Mobile, and even regional operator US Cellular jumped in.What you get for your $99 varies widely, and those differences say a lot about the relative strength or weakness of the carriers and their overall position in the market.What seems clear is that desperation breeds creativity, and inbreeding leaves us with providers who cannot see beyond the boundaries of their own limited range of technologies.

Sorting Out the Options AT&T clearly has the most extensive options and reminds you of the old Bell System; they'll nickel-and-dime you to the point, in the old days, of charging more for Touch Tone service even though it cost them less to provide. However, if you like choices, AT&T has choices. You can get a Blackberry or PDA plan with 5 Gbytes, or unlimited usage with or without tethering ($30 to $60). Messaging plans run from 200 messages per month to unlimited and can be packaged with Media Net that includes text, video, picture, and IM ($5 to $35). You can also get the GPS Navigator with 10 or unlimited routes ($5.99 or $9.99), Push-to-Talk ($9.99), Roadside Assistance ($2.99), and a free calculator plus a jumbo size bottle of Tylenol to figure this out. In short, unlimited voice with all of the add-ons can easily cost twice the basic price.

Verizon simplifies the options by offering three progressively inclusive plans: Unlimited Voice for $99, "Select" (adds unlimited messaging) for $119, and "Premium" (adds unlimited data, V Cast Music, VZ Navigator, and Mobile Email) for $139. With Verizon you also get their CDMA-based cellular service that consistently ranks first in customer satisfaction among all of the national brands. Of course, CDMA throws a wrench in international roaming as the rest of the world is GSM, so you would need a dual mode (CDMA/GSM) multiband phone to use it outside of the US and Canada.

As usual, it's the weaker players who are offering the best deals. T-Mobile and Sprint give you all they've got for $99 per month. Unfortunately T-Mobile doesn't have as much to give at the moment with no navigation service, no push-to-talk, and limited high-speed data access (their data service is primarily EDGE today). Their biggest add-on would be their Wi-Fi Hot Spot service, but since that's not "cellular", it's not part of the package.

T-Mobile's monthly fee for unlimited national Hot Spot access is $29.99 with an annual contract or $39.99 month-to-month, but they knock that down to $19.99 if you have a cellular plan with them. So while the Hot Spot service is not part of their $99 package, you could add it for the same $19.99 per month.

The big story on that front was Starbucks' decision to move their Hot Spot service from T-Mobile to AT&T. Of course, AT&T's package doesn't include the Hot Spot service either, and isn't even mentioned along with the 150 add-on options. It seems that Hot Spots fall under the "wired" side of AT&T, and cellular carriers adhere to a very restrictive definition of "wireless".

An unlimited cellular plan from T-Mobile seems somewhat redundant given the fact that they pioneered consumer fixed-mobile convergence, with their [email protected] service. That service uses dual mode Wi-Fi/cellular handsets and offers unlimited Wi-Fi/VoIP calls from home for $10 per month. They are now testing their Talk Forever Home Phone plan in Seattle and Dallas that provides a unlimited wired VoIP phone home service for $10 rather than the Wi-Fi option. T-Mobile is trying to climb out of the number 4 position in the market, but they are certainly taking the lead in terms of creativity.

The "kitchen sink" has been making a regular appearance in the Democratic primary race, and now Sprint has thrown it into their $99 cellular plan. With Sprint, $99 gets you unlimited voice, messaging, data, video, push-to-talk, and multiple copies of their depressing financials. It is not surprising that Sprint introduced their unlimited plan on the same day they announced a loss of $29.5 billion for 2007 on a revenue decline of 2% (6% for the fourth quarter).

Given the increasingly critical state of affairs at Sprint, they will have to make some bold moves both in terms of product offerings and marketing to reverse the slide. Given that, I think it's only a matter of time (and not very much time) before they divorce themselves from the WiMAX adventure. The only two options I can see for the WiMAX business would be a combination with Clearwire or WiMAX's continuing to languish as a broadband also ran.

Even a Sprint-Clearwire combination would still require billions of dollars in financing to build out a national footprint. In the meantime, a WiMAX service would have to be combined with Sprint's or someone else's 3G cellular offering to cover the massive oceans separating the few WiMAX coverage islands. The other option is that Clearwire continues to go it alone, targeting second-tier markets (they added Charlotte, NC and Rochester, NY this year), and the technology never reaches critical mass in the US.

Conclusion- Dual Silos The one thing that strikes you about the two major carriers is that they continue to operate their wired and wireless businesses as separate entities. AT&T and Verizon operate the largest cellcos and the largest ILECs, but the idea of integrating those businesses seems completely foreign to them. You almost get the feeling that the wired business is the red-haired stepchild. It is absolutely astounding that AT&T offers free Wi-Fi service to their DSL and U Verse (i.e. Fiber-to-the-Neighborhood) customers, but not to their cellular subscribers. You would think that by now they would have discovered that their customers use many forms of wired and wireless communications today, and that different technologies really are better for different applications. So much for synergy.