If the price of calls to and from cell phones all around the world continues to fall as fast as they have been doing – they’ll soon be close to zero. So just how low can they go – and how are the mobile companies making any money at this anymore?
Well let’s be clear – this is all about making money in the longer term for companies by aggressively pricing their competitors out of the market today. And this is great news for phone users and particularly those of us who have a regular need to call across international boundaries to Mexico, South America or Cuba – because the price of those calls just got a whole lot cheaper.
And that is also the biggest market for mobile to mobile calls across international boundaries. That’s because the Hispanic market is enormous in this regard with an estimated 39 million residents of the U.S. now using Spanish as their first language. That’s the equivalent of a middle-sized European country and, coincidentally, not that far off the size of Spain.
So it’s pretty obvious why the mobile operators are scrambling for a big slice of the Hispanic mobile pie – because the market is absolutely enormous. And as with most services, many people get lazy about changing; it’s just too much hassle. So the phone companies are going to war with each other trying to get us on-board in the first place.
In particular, the fastest growing operator T-Mobile has been very aggressive in the market. The company recently announced (at the consumer electronics ‘CES’ show for the industry), that anyone switching services to join with T-Mobile may be able to get as much as $650 in credit to help cover the costs of early termination fees.
The market in the USA is highly competitive and has pretty much reached saturation point – which means that the carriers are now competing very hard indeed for the “switchers” market. In other words – they can’t really grow anymore, so they’re in a real dog-fight with one another to try and get us to switch to them.
Where these price wars all end, and how far they’ll go, is anyone’s guess. Ultimately, it will depend who has the most staying power and the most cash to out-last the competition. But if they’re going to impact on earnings and profitability – it isn’t happening just yet.
In August 2013, T-Mobile posted its largest growth in customer numbers for over four years. And in particular, AT&T looks highly vulnerable to T-Mobile’s increasing strength and ever more aggressive market pricing. This is due to the fact that both operators utilise the same network. This, in turn, makes it a straightforward matter for phone users to switch providers between the two.
Meanwhile, Verizon is still the largest wireless provider with a relatively healthy customer turnover / fallout rate. But quite how long that will last given the amazing deals on offer from T-Mobile is hard to judge.
Whatever happens, though, mobile phone users should make high while this competitive sun shines! And it looks like being particularly great news for those of us calling mobiles across international borders.