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Cell Phone Pricing Set to Increase, Warns Igor Purlantov

Wed, 14 Mar 2012 13:54:30 EST

With the surge of wireless subscribers continuing at a steady rate it should not come as a surprise that the amount of traffic on wireless networks is doubling each year.  Given the huge popularity and growth of smartphones such as the iPhone and various Android models, most of this increase in wireless traffic is in the form of data usage according to Igor Purlantov.  This increase in data use comes as a result of the popularity of mobile applications, mobile web browsing and mobile video that is putting a huge strain on antiquated networks that were primarily designed with voice capacity in mind. 

This ever increasing demand for data services has led all of the major carriers to re-evaluate their growth strategies and expansion plans with a focus toward expanding data capacity instead of voice coverage.  Although this growth in data capacity is ultimately good for the end user, it comes at a large price as major carriers have to invest billions of dollars to upgrade their networks says Igor Purlantov.  It was only five years ago that major carriers were touting their new 3G networks which have since become obsolete given the surge in data demand that has been driven by the tremendous growth of smartphone users.

In order to provide new faster networks with additional frequencies that can handle increased data demand, mobile carriers have to invest in cellular tower upgrades and other improvements at a cost of $50 billion a year.  In order to cover these investment costs, many wireless carriers have been quietly hiking their price plans and getting rid of any promotions or discounts says Igor Purlantov.  Part of his increase in cell phone pricing is coming in the form of mandatory 4G price plan upgrades, particularly for smartphones users, despite the fact that none of the major carriers are finished with rolling out their 4G networks.  Despite intense marketing efforts, many skeptics are calling these mandatory 4G price plan upgrades as nothing more than fraud and deceit as the networks are not truly 4G anyway.

As all of the major carriers make the required transition from 3G to 4G networks to meet the demand in data usage, it is imperative that they have enough capital to complete this undertaking.  Without the required capital major carriers will have a hard time attracting new customers or keeping their existing customers happy with their service says Igor Purlantov.  In order to fill the gap between the investment capital available and the cost of these upgrades, the carriers have little choice but to increase pricing and pass the cost of these upgrades to the consumer. 

This all comes against the backdrop of increased consolidation between the major carriers, leaving consumers with fewer options or cheaper alternatives.  At the end of the day the wireless industry is a capital intensive business and all of the carriers need to figure out ways to make money.  As the old joke goes, if you want to make a small fortune, start with a large fortune and invest in a wireless company.

Source: WebWire

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