Price Forecast: Cellular Telephone Services

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  • Tags : Office Management | Price of Cellular Telephone Services | Market Characteristics | Market Intelligence

Recent Price Trend - Cellular Telephone Services


The average price of cellular telephone services has been decreasing at an estimated average annual rate of 1.7% during the three years to 2016. Price declines are largely the result of a saturated market that has led to intense price-based competition among service providers. A key strategy implemented by carriers to retain and win business from other carriers in the past three years has been to cut their service prices slowly, with little volatility. Falling prices and low volatility have benefited buyers by enhancing their ability to accurately budget for purchases with little risk of drastic price swings.

Vendors of cellular telephone services have been experiencing strong demand due to a rise in mobile device capabilities. Mobile device capabilities have been improving substantially, pushing demand upward. This trend has led to the growing popularity of smartphones and multifunctional conventional cellular telephones with internet and other capabilities, which has contributed greatly to increasing demand for cellular telephone services. Rising demand has been preventing carriers from decreasing service prices at a faster rate.

Despite strong demand, several factors have given way to an overall decrease in service prices. Cellular telephone services are commoditized, and competition is mostly price-based. The largest service providers have been gaining significant economies of scale through acquiring smaller companies. With greater economies of scale, providers can reduce the cost of delivering access to cellular telephone services. In turn, providers have been able to reduce service prices.

Providers also face a growing availability of substitutes. Commercial businesses are increasingly using the internet for voice communication, rather than traditional cellular services. Internet-based voice communication services are price-competitive compared with cellular telephone services. Many cellular service providers have been pressured to lower their prices to remain competitive, benefiting buyers. As such, buyers have been able to take their time evaluating providers without rising prices affecting their purchasing decisions. Buyers can cut costs even further by waiting for prices to fall during the next three years.

 



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