June 25, 2009

MetroPCS Unveils Flat-Rate International Plan

On Wednesday, the up-and-coming telecommunications company MetroPCS Communications Inc announced a plan to boldly go where no low-cost cell phone provider has gone before "” into the realm of flat-fee international calling.

The young wireless provider already offers broadband mobile services in selected metropolitan areas in the United States through its own licensed networks or jointly controlled networks on a flat-rate, contract-free usage basis.  Now, the company says that for $5 a month, customers can add unlimited calling to 100 countries to their domestic calling plans which range in price between $40 and $50.

Assuming that MetroPCS's new plan contains no hidden hooks, it represents a dramatically inexpensive departure from the international rates offered by most major wireless carriers.  By contrast, a 10 minute call to Canada for a Verizon subscriber would cost about as much as MetroPCS's monthly fee for unlimited calls abroad.

MetroPCS's website listed countries like Canada, Mexico and Britain as being included in the new plan, but offered few additional details.  Through the website potential customers are able to enter individual international phone numbers to check whether or not they are covered under the plan.

Industry analysts say that the plan is a bold move by the upstart wireless provider as it attempts to wedge itself into an already fiercely competitive and crowded U.S. telecommunications market.

And as always, with fierce competition between companies, the consumer inevitably comes out on top.

"Pricing is coming down a lot in wireless, especially in the voice side," said Chandan Sarkar, professional analyst for Auriga USA. "This is yet another indication of that."

It remains unclear whether MetroPCS's move will spark a competitive response amongst other industry heavyweights such as AT&T, Verizon and Sprint Nextel.

Spokeswoman Brenda Raney of Verizon Wireless said that she was unable to comment on whether Verizon Communications and joint venture Vodafone Group would respond with any rate adjustments of their own.  She instead emphasized that customers also value the integrity and reliability of their domestic network as an important factor when choosing a cell phone carrier"”an obvious dig at MetroPCS's comparably patchy coverage.

"What you also have to do is take into consideration that you're buying more than just international," she said.

An official statement from Boost, one of MetroPCS's main competitors in the realm of unlimited domestic calling, stated that the company will not attempt to modify its price structure or marketing model in an attempt to match the MetroPCS rate. Boost currently offers the most inexpensive per minute rates to Mexico and Puerto Rico.

Larger competitors have chosen to simply highlight the perceived shortcomings MetroPCS's new plan.  AT&T, which charges a $3.99 monthly fee just have to have access to its premium per minute international rates, noted that its customers have the option of calling almost twice as many countries as those currently available through MetroPCS.

"There are significant limitations to the Metro PCS offer," claimed AT&T spokesman Mark Siegel.

Regarding how MetroPCS is able to offer such low international prices, industry analyst Michael Nelson with Soleil/Nelson Alpha Research says that MetroPCS is probably utilizing Internet technology.

"They have to be routed over the Internet to get rates that low," explained Nelson. "It's kind of interesting how they're able to do that."

Wireless providers such as MetroPCS, Leap Wireless, Boost and Cricket Wireless have proven themselves effective in attracting lower-income customers with contract-free, pay-as-you-go, unlimited calling plans.

In the midst of an ongoing economic slump that has millions of Americans tightening their belts, low-cost cell phone services has been one of a handful of sectors to experience steadily growing demand.

At the end 2008, MetroPCS already had approximately 5.4 million subscribers in eight states.

On Wednesday, MetroPCS shares climbed over 2 percent to $14.63, while Standard & Poor's announced on Monday that the company would be added to its bellwether S&P 500 stock index later this month.


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