Since its failed takeover bid of T-Mobile executives at AT&T have been fear mongering over higher wireless prices, claiming that the cost of building out a network that can support higher data demands will be more expensive than the tens of billions the company planned to spend by buying T-Mobile.
AT&T Chairman and Chief Executive Randal Stephenson revealed at the Milken Institute’s annual global conference that the US wireless cellphone market can’t support the large number of providers because there simply isn’t enough wireless spectrum for future growth potential.
According to Stephenson his own stats show the wireless data usage of Americans growing by 75 percent each year for the next five years, consumption that will put a stranglehold on currently available wireless spectrum.
Because of that stranglehold Stephenson says prices at AT&T Wireless will increase by nearly 30 percent while customers will see more limits placed on the data they are allowed to use.
The CEO notes:
“We’re running out of the airwaves that this traffic rides on.”‘
He goes on to note that if providers can’t provide for a growing market they will be forced to bow out or find a merger the government will actually approve.
In making his argument Stephenson points to the Asian, European and Latin American markets which rely on less carriers who he believes better utilizes wireless spectrum which in turn keeps pricing down.
AT&T Wireless regardless of what happens over the next several years will continue to make their price point argument in the hopes of eventually securing the merger they want. In the meantime Sprint Wireless, T-Mobile and other carriers continue to offer better data rates and better pricing, often with few data restrictions, yet compete in the same market space at AT&T Wireless where two basic iPhone plans with 2GB data and unlimited text messaging can cost upwards of $140 per month.
I’m willing to bet if prices raise to nearly $200 for two iPhone’s AT&T will see a nice steady drop in its user base as customers flee to other wireless carriers who are better managing their data networks and price requirements.