Analysts surprised by EV-DO price drop? Doh
News.com's Marguerite Reardon has reported that Verizon Wireless is getting aggressive on mobile broadband by dropping the all-the-data-you-can-eat-per-month price on its high speed wireless broadband service from $80 per month to $60 per month. Verizon Wireless isn't even done its multi-billion dollar rollout of the 3G-rated wide area wireless service which, like Sprint's comparable service, is based on EV-DO technology. Verizon Wireless began the rollout with its first two North American markets two years ago and, as of the seven new ones added this week, is now up to 60 total markets in North America. According to Reardon's story, at least one analyst was surprised by the price-drop:
"Verizon is acting like it's a price war when there isn't anyone else really competing against them yet," said Albert Lin, a telecom analyst with American Technology Research who first wrote about the price cut in a research note to investors published last week.
Well, yes and no Albert.
Yes, Verizon Wireless is way out in front of all of the other cellcos (Sprint, Cingular, and T-Mobile) when it comes to the race to get high-speed wireless broadband into as many North American markets as possible, as soon as possible. But, when you consider the fact that signing up for Verizon Wireless' EV-DO service requires a two-year contract, the price drop could easily bring new customers into the Verizon Wireless fold before those other cellcos have a chance to catch up with their rollouts (Sprint says it will have its EV-DO service in 60 markets by the end of this year). It could also get customers locked-in before other disruptive alternatives such as Wi-Fi or WiMax get any more traction against the traditional cellco-provided services. Once customers are onboard, they're less likely to switch -- particularly in this case where voice service is also required in order to get the special deal (even though cell numbers are easily switched between providers).
No, even though certain services aren't even rolled out, the price war is already underway in this build-up period. For example, if you followed my coverage of Cingular's wireless broadband plans, you would have seen how a spokesman for that company made it clear that I shouldn't go buy the company's existing $80 per month pricing for its slower-than-EV-DO but still all-the-data-you-can-eat-per month service. In that story, I predicted that the monthly service charge will come in at around $59.99 -- the apparent sweet spot for broadband wireless service.
If you haven't seen me extolling the virtues of EV-DO, be sure to read My EVDO will beat your WiFi any day (well just about) and Summer blackout? No problem. EV-DO saves the day. While you're at it, make sure you also check out Why mobile synch can stink and Smartphones: Where the computer and telephony cultures clash.
Finally, just a reminder: if you're shopping for wireless broadband services and devices to match, just remember that the top three most important criteria are coverage, coverage, and coverage. Before you get too smitten with some new device that you're seeing reviews of, start out by figuring out which cellcos offer the best signal strength at the places where you need it most (your house, your office, frequently traveled routes, and other oft-visited destinations). Then, once you've figured out which of the cellcos has the best coverage, see what devices (phones, smartphones, data cards for notebooks, etc.) that company resells. As I've said many times before, you're obviously welcome to first shop for the device that appeals to you most. But you'll be extremely disappointed once you find out that it hardly works in the places you spend most of your time.