Cell Phone Service Costs Dip 0.2% in September; Latest Econ One Survey Finds Little or No Change in Average Price of Cellular Service in Most Cities.

Business Editors/High-Tech Writers

LOS ANGELES--(BUSINESS WIRE)--Nov. 1, 2001

The average cost of cell phone service in the U.S. remained unusually stable in September, according to Econ One, an economic research and consulting firm which studies costs in the wireless industry.

The average monthly cost of service in 25 major cities, across four typical usage levels (30, 150, 300 and 600 minutes) was $37.17 in September, down 0.2 percent from August. Average costs were unchanged in 10 of the 25 cities surveyed, the highest number to show no change since the survey was begun more than two years ago. Only five cities showed price changes of greater than one percent.

"It has been unusual to see such stability in cellular costs across the carriers," said Econ One Senior Economist Charles Mahla. "Typically, at least one carrier in most cities will alter its offering, resulting in at least some change in average costs. That no alterations occurred in 40 percent of the cities we survey is quite unusual," he said. "We expect that such plan stability will change as we approach the holiday shopping season."

Atlanta was the only city to show a substantial increase -- up 4.1 percent to $37.76. Houston, Detroit, Cleveland, Cincinnati and Chicago had increases of 0.4 percent.

"The average cost across the four usage levels we analyze went up in Atlanta after VoiceStream took over Powertel, which generally had been the low-cost provider there," Mahla noted. "VoiceStream is a very competitive carrier in most of the other markets covered in our survey, so it will be interesting to see if it alters its plans in Atlanta."

The greatest decreases in costs were in three California cities: San Francisco (-2.5 percent), Los Angeles (-2.2 percent) and Sacramento (-1.7 percent).

"Interestingly, this is the first time since we began our survey in June of 1999 that a California city is not in the top two in terms of average cost," Mahla noted. "In fact, California cities have occupied both the number one and number two positions in 14 of the 28 months we have conducted our analysis."

"One possible explanation is the changes in carriers in California," Mahla said. "AT&T replaced Cellular One in the Bay Area, and AT&T took over for GTE in San Diego. In addition, Verizon and Cingular are establishing national footprints and pricing plans, which is having the effect of bringing California costs more in line with other markets."

Cincinnati, for the second straight month, had the highest costs ($39.29) followed by Boston ($38.67), San Francisco ($38.03), San Diego ($37.96) and Atlanta ($37.76).

Phoenix in September again had the lowest average costs surveyed -- $35.80 -- followed by Seattle, Chicago, Minneapolis and Houston.

Those who wish to see Econ One's survey in detail, or who would like to be notified by e-mail of future survey results, may visit Econ One's Web site: www.wirelesssurvey.com.

About Econ One

The Econ One Wireless Survey is published monthly by Econ One Research, Inc., an economic research and consulting firm with offices in Los Angeles, Sacramento and Houston. Econ One provides economic analysis and expert testimony in many areas, including: antitrust, contract disputes, intellectual property and patent infringement, regulation, and unfair competition. Industry specialties include telecommunications, energy, biotechnology, computer hardware and software, manufacturing, and financial services.

              Average Monthly Charge for Wireless Service
                Across 30, 150, 300, 600 Minutes of Use
                            September 2001

                                                     Percent
                                       Average      Chg. from
No.      City                         Cost Sept.      August

1.       Cincinnati                    $39.29         +0.4
2.       Boston                         38.67          0.0
3.       San Francisco                  38.03         -2.5
4.       San Diego                      37.96          0.0
5.       Atlanta                        37.76         +4.1
6.       Cleveland                      37.50         +0.4
7.       Los Angeles                    37.49         -2.2
8.       Dallas                         37.44          0.0
9.       St. Louis                      37.44          0.0
10.      Washington, D.C.               37.44          0.0
11.      Philadelphia                   37.44          0.0
12.      New York                       37.30          0.0
13.      Pittsburgh                     37.30          0.0
14.      Miami                          37.11         -0.7
15.      Detroit                        37.01         +0.4
16.      Kansas City                    36.91          0.0
17.      Tampa                          36.87         -1.1
18.      Sacramento                     36.59         -1.7
19.      Denver                         36.48         -0.5
20.      Portland                       36.48         -0.8
21.      Houston                        36.27         +0.4
22.      Minneapolis                    36.26          0.0
23.      Chicago                        36.25         +0.3
24.      Seattle                        36.25         -0.5
25.      Phoenix                        35.80         -0.7

         AVERAGE                       $37.17         -0.2

Source: Econ One Research, Inc. and providers' Web sites as of September 7, 2001.