Verizon wireless - Re: TechWeb: "GSM Based phones can usually be used in many non-U.S.

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Re: TechWeb: "GSM Based phones can usually be used in many non-U.S.

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2006-12-26, 12:33 pm

John Richards wrote:

> Can a business afford to greatly undercut a competitor's prices if it means
> losing money? Instead of imagining some grand conspiracy, could it be
> that all the wireless companies have pretty much the same cost basis and
> the same technological limits?

Not the same cost basis at all, which is why similar prices for service
don't result in identical profit margins. The carriers that went from
AMPS to TDMA to GSM, spent a lot more money on capital expenditures than
the ones that went from AMPS to CDMA. This is why Verizon's margins have
been so much higher. Now that Cingular has completed its GSM conversion,
its margins are going up, but still lag considerably.

Unfortunately, you can't price your products higher just because your
cost basis is higher, unless you offer some other compelling advantage.
As the Consumer Reports and JD Power surveys show, there is no
compelling advantage that Cingular could charge more for.

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