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Why higher cellphone bills may not be so bad

Apr 10, 2018 Walt Wojciechowski

Why higher cellphone bills may not be so bad

Here's something that just about everyone can agree on: No one likes to see their monthly bills go up. We all want to get the most bang for our buck, especially when it seems like everything is getting more expensive.

Due to a failed merger, higher cellphone bills could be in the offing this year. However, based on a variety of recent developments - like an improved economy, strengthening consumer sentiment and families increasingly eliminating what was once a fairly universal monthly expense - more costly wireless services may not be so bad.

Industry experts suspect consumers will be paying more because two wireless carriers may not be joining forces after all. As reported by The Wall Street Journal, Sprint and T-Mobile were poised to merge but were unable to come to an agreement on terms at the bargaining table. As a result, both companies have signaled that they will be reducing how often they offer discounted rates.

Sprint CEO Marcelo Claure told analysts during a recent conference call that part of the reason for fewer promotional offers is strategic, putting more emphasis on improving service quality in comparison to other carriers.

"We're going to have a lot of room to increase our price of unlimited to get to similar prices as Verizon and AT&T in the future," Claure explained, according to the WSJ. "You get that by having an amazing network."

Given that Sprint and T-Mobile represent two of the top five most widely used wireless providers in the U.S., millions of Americans could see more of their hard-earned money go toward what they spend on minutes, data or text messaging packages. And if there is anything that Americans own in droves, it's smartphones, as U.S. consumers look at their handheld devices approximately 12 billion times per day combined, according to a study done by Deloitte in 2017.

Hands holding smartphone.Smartphone ownership is practically universal in the U.S.

Two-thirds believe high quality wireless is a necessity
While it's unclear how much - if at all - cellphone bills will actually rise in 2018, spending more is often easier to accept when the increase is something consumers highly value. And top quality wireless service is one such thing. Indeed, more than two-thirds of Americans believe reliable wireless telecommunication access is a must-have, according to polling done by the trade association Cellular Telecommunications and Internet Association. By way of comparison, that's a higher share than those who prioritize good schools (65 percent) affordable home prices (60 percent) and a tolerable commute (41 percent).

Additionally, cellphone users have a host of providers they can choose from, and such competition can result in lower prices. Nearly 95 percent of Americans have at least four wireless providers as potential options, based on data compiled by the CTIA.

Americans no longer using landline phones
Not only that, but more households are cutting the cord - the landline cord, that is. According to the Centers for Disease Control and Prevention, a sightly majority of homeowners - 50.8 percent - solely use their cellphones for telephone services. Only 39 percent have both a landline and wireless.

Consumers are also feeling better about their financial situations. Based on the most recent data from the University of Michigan, consumer confidence is at its highest point since 2004, The Wall Street Journal reported. This is likely due to a combination of factors, such as higher earnings and low unemployment.

Cellphone payments fall under the alternative credit data banner. Consumers who take care of these expenses promptly help provide the corroboration lenders need to determine their creditworthiness, especially if they're unbanked or underbanked. Microbilt is your one-stop resource for all things alternative credit, dedicated to helping businesses make smart lending decisions.