The $10 Sea Change For 3G
2005-03-28 11:47:00
Ten bucks isn't much, but the decision by regional wireless carrier Alltel to price its 1xEV-DO 3G service ten dollars cheaper than its competition could signal an important sea change.
Don't get me wrong: At $70 a month for unlimited access, Alltel is still charging too much for 3G, particularly since it tends to focus on smaller markets compared to the Verizons and Cingulars of the world. Interestingly, and probably not coincidentally, however, Alltel is initially launching its lower-priced 3G service in one big market -- Cleveland -- where it will compete directly with Verizon Wireless' 3G service.
Ultimately, though, all the wireless carriers, including Alltel, don't seem to fully understand that their 3G offerings aren't competing against each other so much as they are against other technologies.
Verizon Wireless' commercials for its 3G service humorously depict how hard it can be to find a Wi-Fi hotspot and correctly point out the attractiveness of 3G offers service this is available throughout broad coverage areas. But while 3G is attractive, hotspots are significantly less expensive and offer faster access. Plus, as citywide Wi-Fi networks become common, that technology will be as ubiquitous as 3G.
In the meantime, early adopters and, increasingly, mainstream users are using hotspots and the future of that form of access looks strong. Because of that, the only way that the wireless carriers can logically fight back is to compete on the basis of price. However, wireless operators have stubbornly instituted pricing aimed at early adopters. Their pricing schemes also assume that 3G is the only game in town.
Given how much wireless operators are investing in 3G, they're making a potentially disastrous mistake. That's why all wireless carriers will benefit if Alltel sparks a 3G price war. A price war would put 3G back in the ball game and would give it a much better chance of succeeding despite the ongoing miscalculations of the wireless operators.
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