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:
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.
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.