Usage-based pricing could prove key to increasing major wireless carrier profits,...
Usage-based pricing could prove key to increasing major wireless carrier profits, Sanford Bernstein analyst Craig Moffett said in a research note. “The wireless industry is an odd mix, in our view; at once highly consolidated (almost 90 percent of unlevered…
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
free cash flow in the industry comes from just two companies) and yet sufficiently fragmented that even the Big Two are earning what we consider to be lackluster returns,” Moffett wrote of AT&T and Verizon Wireless. “If the wireless telecom market is a duopoly, it’s not a very good one.” Public Knowledge sounded alarm bells after AT&T said it was considering letting content providers and app developers pay for the mobile data customers use (CD Feb 28 p17). Moffett sees that kind of pricing as helpful for carriers facing declining profit margins. “Usage caps have, until now, been primarily aimed at limiting runaway consumption, and therefore runaway capex,” he said. “But scarcity-pricing is the prerequisite for the exercise of pricing power. With scarcity pricing in place, reverse billing could easily become not a nice-to-have but instead a must-have ’toll’ for applications intent on reaching bandwidth-capped consumers."