January 19, 2011

Sprint To Raise Smartphone Fees

Sprint Nextel Corp said it plans to increase the monthly service fees by $10 per month for its smartphone customers, bringing its prices closer to those of its bigger rivals: Verizon Wireless and AT&T Inc.

The price increase will become effective January 30. Sprint said it makes more sense to increase the service charge rather than limiting data usage such as AT&T has done. After the change, Sprint's cheapest service will be $79.99 for its smartphone customers.

While Sprint shares fell after the news came to light, some analysts said the price increase was a competitive move. Sprint already charged a $10 per month premium for a few smartphones with faster wireless data connections. The new fee will extend the premium service to all smartphones.

This could help ease concerns over data price wars by easing pressure on rivals to lower their data service charges.

Pacific Crest analyst Steve Clement, for instance, said the move will likely help T-Mobile USA, the No. 4 wireless provider.

"When you've the most aggressive pricer go out and raise prices that's good for everybody," Clement told Reuters. "T-Mobile USA had been viewed the valued leader, but they have lost some of that ground to Sprint. This potentially opens the door for them a little bit."

Sprint's $79.99 fee will include 450 minutes of talk time, unlimited mobile to mobile talk and unlimited texts and usage of data services which includes Web surfing. Unlimited texting and data usage is not including when the customer is roaming off the network, however.

Similar services at Verizon Wireless would cost about $110 per month, and AT&T's most comparable offer would cost about $85 a month, but limits data downloads to 2 megabytes per month, while Sprint and Verizon Wireless still offer unlimited downloads.

Even after Sprint's price hike, its service would still be about 33 percent cheaper than its bigger rivals, Wells Fargo analyst Jennifer Fritzsche told Reuters.

"This move is interesting in terms of timing as we believe Sprint may be more confident in its pricing power it has with its customers," Fritzsche said.


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