Price Increases In Mobile Market?

The mobile market has seen a lot of intense marketing in the last few weeks. There has been a war among the leading phone carriers to try and get on top. The question is, will this kind of competition hurt you or help you? Let’s take a look and see if we can figure out exactly how the wars in the mobile market will affect you.

It All Started With T-Mobile

The start of this aggressive war came when T-Mobile began working harder to steal customers from other phone carriers. The marketing strategies were used to get more people to switch over, according to Reuters.. But that is nothing new. All these companies have worked hard to steal competitors. But T-Mobile was more aggressive about it this time by specifically targeting customers of the top mobile carriers. The first real strike came from AT&T. Its attack was specifically on T-Mobile. AT&T told customers that they could get up to $450 in credits by switching from T-Mobile to their carrier services. Sprint began to announce bigger discounts for family plans too, but it wasn’t as targeted of an attack as AT&T’s was. In response to that, T-Mobile began offering to pay cancellation fees for customers who want to switch from another carrier over to them. The car continues, and the worrisome part about it is whether or not Verizon will respond.

Stocks Not Doing Well

Though stocks have gone up and down during this whole thing, overall, they are considered unstable. The reason why these kinds of wars would worry stockholders is because it shows instability in the company and that there may be a bigger problem soon. If companies keep spending money to fight the competition instead of spending money on innovation and smart marketing strategies, they will waste a lot of money and be no richer in customers. The inability to predict the future and which of the mobile carriers will get ahead through the war makes holding stock in any of the companies fairly risky right now.

The Competition: Economics

Typically, friendly competition means your prices drop, but on the mobile market, that might not be the case. The mobile carriers are spending outrageous amounts of money to try and keep up with the competition on both marketing and credits for customers. Though the customers may enjoy the slight price decrease for a while, the money has to be made up somewhere. It is like when you buy furniture and they throw in an extra night stand. Really, they already put the cost of the nightstand into your price, so you are paying for it either way. The cost of all the credits they are giving you will quickly be made up in expensive plan pricing. The friendly competition only helps prices if there are a lot of options out there, but not if all of those options are spending outrageous amounts of money fighting each other. Be very careful if you decide to switch plans, and make sure you are prepared for the possibility of paying much more in the long run.

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Source: reuters.com/article/2014/01/11/us-ces-mobile-pricewar-idUSBREA0A08U20140111