dslreports logo

story category
Wall Street Journal Realizes Wireless is Expensive
Consumers Starting to Feel Smartphone Pinch
by Karl Bode 06:08PM Wednesday Sep 26 2012
The Wall Street Journal has discovered that wireless services are expensive and becoming more so. The paper cites new Labor Department data showing that spending on phone services jumped 4% last year, with the average family now paying $1,226 annually -- significantly more if the home has more than one smartphone. The article posits that we're about due for a consumer reaction to these hikes, with users starting to either trim back on wireless bills (slowing growth) or look elsewhere to cut household costs:
Click for full size
Much of the revenue growth that industry executives and investors are hoping for is likely to come from higher-income households that do have the money to spend more on wireless data. But the wireless industry also generates a lot of revenue from lower-income users....As wireless service gets more expensive, the trade-offs become more painful. That could threaten to further crimp consumer spending elsewhere—or slow the upward swing in consumer spending on wireless.
The Journal's amazing discovery comes on the heels of a study showing that 50% of wireless customers pay more than $100 a month, with 21% paying more for wireless than they do for groceries each month. Another recent study found that many carriers are over-estimating the amount of data consumed, and as a result are over-billing users for data consumption. These high prices aren't expected to abate anytime soon -- particularly as grandfathered unlimiited data users get shoved toward AT&T and Verizon's new shared data plans and pricier $15 per gigabyte overages.

While the Journal has discovered that wireless services are expensive, the article seems to attribute these higher prices to magic -- and not thanks to duopoly dominance of the sector. Granted plenty of blame falls on the shoulders of consumers not willing to investigate the scattered lower-priced options that are available to them. Many of our regulars still flock to smaller, less-known carriers like Millenicom to save a buck, and there's a slew of new MVNOs (Ting, Republic Wireless) and no-contract prepaid companies who are desperately trying to shake up high-price gridlock.

60 comments .. click to read

Recommended comments


Santa Monica, CA
·Time Warner Cable

2 recommendations


The article features Verizon iPhone subscribers.

Back-of-the-napkin estimates for VZW iPhone is $120/month for one phone, slightly less for multiples.

Not sure how this qualifies as news. Verizon has always been the premium carrier, with not quite half of America's contracting customers choosing to pay more for the perceived quality of their service. Likewise for Apple - the masses are willing to pay a hefty price to have the latest fashion trend.

No one is forced to buy a "smart phone", sign a contract, or choose a contract carrier.