Wireless carriers are quietly hiking the prices customers pay for their mobile phone service. Three of the four major networks raised their rates or scrapped discount deals this month -- and Verizon Wireless is staying oddly silent about the terms of the data plans it will offer iPhone customers when it begins selling the phone next month.
133Email Print The rising prices are intended to help the networks offset the increased costs of delivering apps, the mobile Web and especially mobile video to a rapidly growing number of smartphones. Faster networks, additional frequencies, cell tower upgrades and other improvements are costing the industry about $50 billion a year.
"At the end of the day, wireless is a capital-intensive business, and carriers need to figure out ways to make money," said William Stofega, program director of mobile device technology and trends at research firm IDC. "We're undergoing a transition from 3G to 4G, and it's really, really important for them to have capital to make good on all their propositions."
As a result, wireless companies are passing those costs onto you. Here's the breakdown of the changes taking place with the four largest U.S. carriers.
Verizon: The nation's largest wireless carrier decided to stop offering its "New Every Two" discount to users who renew their two-year contracts with the company. The promo gives existing customers credits of $30 to $100 off the already sharply discounted price of a new phone, after they have completed at least 20 months of a two-year contract.
Anyone with a current Verizon contract is grandfathered in and will be able to use the credits they've already earned toward their next upgrade. But those signing new contracts next month -- like the anticipated wave of iPhone buyers -- won't have the discount to look forward to when they upgrade to their next phone two years from now.
Verizon's future smartphone plans are also likely to be pricier than its current unlimited-data offering.
The company hasn't yet announced pricing for the 4G-LTE phones that will be available later this year, but CEO Ivan Seidenberg has hinted that customers will have to pay more if they want to take advantage of faster speeds.
Verizon is also holding off on announcing data plan pricing for the iPhone 4, which it will start taking orders for on Feb. 3. That silence suggests that the plan's cost might be more expensive than for other Verizon (VZ, Fortune 500) smartphones.
0:00 /1:30Verizon gets iPhone - but no 4G
Citing an inside source, the Wall Street Journal reported that Verizon's iPhone 4 plan will offer unlimited data -- but the report said nothing about what Verizon will charge for it.
AT&T: Beginning Jan. 23, AT&T will make several changes to its pricing schemes for new or renewing customers, according to a source with knowledge of the company's business plans.
Like Verizon, AT&T (T, Fortune 500) is ending its additional discounts for renewing customers. But unlike its competitor, AT&T will only extend those $50 or $100 discounts through July 23, rather than letting its customers get one more pop a year or two down the road.
The company is also upping the price of adding an additional line to a family plan, increasing the activation fee by $10 to $36 per line.
The carrier will eliminate its $5-for-200 text messages plan, as well as its $15 for 1,500 messages, replacing it with a $10 for 1,000 messages plan. With a 10-cents-a-message overage charge, the new plan will cost users more if they send more than 1,100 texts a month.
AT&T declined to comment on these changes. Customers currently under contract won't be affected, but anyone altering or renewing their contract -- or starting a new one -- will be hit.
In June, AT&T became the first carrier to eliminate its unlimited data plan for mobile phones. The company slashed the prices of its data plans, but also added caps to them. Customers now have to pay an additional $10 for each gigabyte of monthly data usage that exceeds the allotted 2 GB limit.
Sprint: What was once a $10-a-month extra charge for 4G usage now applies to all of Sprint's smartphone users.
Sprint announced Tuesday that it will increase the price of its smartphone plans by $10 a month, making its cheapest plan $80. Current customers are unaffected, but starting Jan. 30, new buyers will pay the higher rate.
Sprint said the increase was necessary to meet the data demands of its customers.
"The charge will assist Sprint in offering simple and affordable unlimited plans for its customers while maintaining a wireless network able to meet the growing appetite for a richer mobile experience," Sprint said in a recent press release.
Curiously, Sprint (S, Fortune 500) denies that it charges "extra" for smartphones.
A spokeswoman noted that the required $10 per month premium data add-on "allows the user to take advantage of a richer data experience." That still sounds like "extra" to us.
T-Mobile: The last holdout in terms of raising costs, tiering prices or cutting perks is T-Mobile, which remains the cheapest of the major carriers. It doesn't charge more for its 4G service -- though many would argue that T-Mobile's 4G network isn't truly "4G."
