Econ One Survey Shows Cell Service Costs Dip 1.6%; Holiday Shoppers Advised to Evaluate Features, Package Deals Carefully.

Business Editors

LOS ANGELES--(BUSINESS WIRE)--Dec. 13, 2000

The cost of cell phone service continues to gradually decrease in most of the country, according to the latest survey by Econ One, an economic research and consulting firm which studies the costs of wireless service.

The cost of monthly cell phone service for four typical usage plans (30, 150, 300 and 600 minutes) across the 25 major U.S. cities surveyed declined from an average of $40.36 in September to $39.70 in October -- a decrease of 1.6 percent. The average cost decreased in 16 cities, rose in 7 cities and was unchanged in two.

"As we expected, the slight rise in costs we saw in August was not a portent of future increases," said Econ One Senior Economist Charles Mahla. "October's drop confirms that costs will not likely rise again this year," he said.

Average costs decreased most in October in Miami (-8.9 percent), Tampa-St. Petersburg (-6.9 percent) and Cincinnati (-6.8 percent). The greatest increases from September to October were in Dallas (+3.4 percent), the San Francisco Bay Area (+2.7 percent) and Atlanta (+1.2 percent).

"Cities like Miami, Tampa and Cincinnati saw a sharp drop in costs in October, thanks to aggressive pricing by Verizon," Mahla noted. "As we've been seeing in the recent past, one or two carriers in a market are driving these cost differences -- one firm leads, and typically its competitors soon follow."

Major California cities led the nation in the cost of cell phone service. Los Angeles had the highest average monthly costs in the country -- $44.28, up 0.7 percent from the previous month -- for the second month in a row. The San Francisco Bay Area had the second highest average -- $43.92, up 2.7 percent -- followed by San Diego at $42.93.

Seattle for the third month in a row showed the lowest average cost in Econ One's survey -- $36.88, down 1.4 percent from September. Houston and Minneapolis had the next lowest average costs.

Advice for Holiday Shoppers

Mahla said those considering buying a cell phone for someone's stocking should keep these suggestions in mind when trying to compare one service plan with another:

1. Before deciding on any service, first determine how much service you need:

-- Total minutes per month

-- Weekdays, nights, weekends

-- Local or long distance

-- In service area or outside service area

2. Determine from where (physically) most of your calls will be made. Coverage areas can differ, so ask each carrier where their service works.

3. Watch for early termination fees. If you decide you want to end your service before your contract expires, you can face substantial fees -- read the fine print.

4. Be sure to ask how your cellular charges might change over time. Many offers are limited to a period shorter than the cellular contract, meaning that sometime during the contract period, your bill may "mysteriously" get larger. Have the sales rep explain what charges you'll be responsible for over the life of the contract.

5. Be careful to match your phone purchase to your service needs. Phones with lots of bells and whistles also come with a higher price tag, both in terms of the phone and the service. High-end phones provide features that can't be utilized on low-cost service plans -- it doesn't pay to overbuy on the phone just so you can clip it on your belt.

6. Things to watch for on Discounted or "Free" phones:

-- Discounted or free phones are typically offered with

contracted plans. The phone won't seem free if you must pay

hefty charge to get out of a contract.

-- Are they new or remanufactured? While remanufactured phones

come with some form of manufacturer warranty, some people

prefer only a new phone.

-- What is the "unactivated sales price"? Under California law,

when carriers sell bundled service and phones, they must

charge the sales tax on the phone based on the unactivated

sales price. This price can vary. All else being equal, look

for the store with the lowest price on the phone you want.

7. The main carriers in your area probably use a different technology to transmit wireless phone calls (CDMA, TDMA, GSM). Wireless phones, as a result, are more or less carrier-specific, meaning that you won't be able to use a phone you purchased for AT&T Wireless, for example, with Sprint PCS's system. Therefore, moving from one carrier to another will require a new phone, another reason not to overpurchase on a phone.

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 and Sacramento. 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
October, 2000

No.   City                 Average Cost          Percent Change
                           October 2000            from Sept.
---   ----                 ------------          --------------
1     Los Angeles            $   44.28                +0.7
2     San Francisco          $   43.92                +2.7
3     San Diego              $   42.93                +0.8
4     St. Louis              $   42.00                 0.0
5     Cleveland              $   41.64                -2.9
6     Pittsburgh             $   40.82                 0.0
7     Cincinnati             $   40.80                -6.8
8     Boston                 $   40.64                +0.5
9     Detroit                $   40.49                -4.3
10    Philadelphia           $   40.27                -0.1
11    Atlanta                $   39.59                +1.2
12    Sacramento             $   39.43                +0.5
13    Kansas City            $   39.34                -3.1
14    Tampa                  $   39.22                -6.9
15    Dallas                 $   39.08                +3.4
16    Phoenix                $   38.81                -0.5
17    Chicago                $   38.71                -0.5
18    Miami                  $   38.32                -8.9
19    New York               $   38.10                -3.2
20    Denver                 $   37.58                -1.5
21    Portland               $   37.58                -1.5
22    Washington, DC         $   37.53                -4.2
23    Minneapolis            $   37.32                -2.2
24    Houston                $   37.29                -1.6
25    Seattle                $   36.88                -1.4
                             ---------                ----
      AVERAGE                $   39.70                -1.6

      Source: Econ One Research, Inc. and providers' Web sites as of
Oct. 6, 2000