February 20, 2008 in Business

Verizon, AT&T offer flat call plans

Peter Svensson Associated Press
 

NEW YORK – Verizon Wireless introduced an unlimited calling plan Tuesday for $99.99 a month, an offer that was quickly matched by AT&T Mobility.

Verizon Wireless was apparently the first major carrier to make an “unlimited” plan available nationwide with no domestic roaming or long-distance fees. Its announcement was all but five hours old when AT&T announced its own unlimited plan.

“This is a highly competitive market and we’re committed to moving fast to meet customer needs,” said Ralph de la Vega, chief executive of AT&T Mobility.

The stocks of carriers’ parent companies, plus Sprint Nextel Corp., were hit by the price war, even though a relatively small number of heavy cellular users are likely to take advantage of the offers to cut their bills.

The Verizon Wireless plan is “likely to have repercussions for years to come,” Sanford C. Bernstein analyst Craig Moffett wrote in a research report.

Moffett said Verizon Wireless’s move is a blow to confusing pricing plans, and likens it to Sprint’s introduction of flat-rate long-distance prices for landline phones in the 1990s. That made it easier to compare plans and hastened a rapid decline in prices, Moffett said.

Verizon Wireless is a joint venture of Verizon Communications Inc. of New York and Vodafone Group PLC of Britain. There had been speculation that Sprint would introduce a nationwide unlimited plan. In May, it introduced one to residents of Philadelphia, Minneapolis, Tampa, Fla., and parts of Northern California and Western Nevada. Sprint’s plan costs $119.99 a month, and includes unlimited Web use, e-mail and messaging, which Verizon Wireless’s and AT&T’s plans do not.

Citigroup analyst Michael Rollins said Sprint “fumbled at the goal line” and let Verizon Wireless get ahead of it in improving customer perception. He called it a surprising move for Verizon Wireless, which has previously used its image as a quality provider to charge higher rates.

Sprint spokeswoman Emmy Anderson said the company is looking at how well the offer is doing in the trial areas, and hasn’t announced any plan to take it nationwide.

Helio LLC, a small carrier that rents time on Sprint’s network, is offering a $99 monthly unlimited plan nationwide. It includes unlimited Web use, e-mail and messaging. SK Telecom Co. of South Korea owns a majority of Helio.

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