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Small Wireless Carriers Driving Down Prices

cell phoneAmericans have seen telephone costs fall nearly 3 percent over the last 12 months, amid stronger competition in the wireless market.

Wireless service prices have fallen 5.9 percent during that period, and landline service fell 2.2 percent, according to data from the Bureau of Labor Statistics released on Friday. In June, telephone services ticked 0.1 percent higher.

The increasing number of new carriers has added to the intense competition among the major carriers like Verizon Wireless and AT&T, said Theodore Cangero, data scientist at the American Institute for Economic Research. And the new entrants are increasingly gaining credibility, he said.

For instance, upstart cell phone service company Ting recently earned the highest rating in Consumer Reports’ annual U.S. Cell Phone Carrier Survey, Cangero noted.

Rounding out the top three from the Consumer Reports Survey, Credo and U.S. Cellular scored high on staff knowledge and support, even though they do not have brick and mortar stores.

Smaller firms are having some success luring consumers away by helping them out of their contracts, he said. For example, Ting offers a 25 percent rebate on early termination fees, Cangero noted.

“It all adds up to lower prices for the consumer,” Cangero said.

Prices for phone services are part of AIER’s monthly Everyday Price Index, which uses the Consumer Price Index as a starting point, then strips out fixed expenses to concentrate on those prices that fluctuate from month to month.

In June, the EPI increased 0.8 percent, while the CPI increased 0.4 percent. A big difference between the two is rebounding energy prices, which makes up a larger share of the EPI.

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