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Pricing strategy for wireless carriers

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P.14 According to Cahners In-stat Group, the number of worldwide wireless phone subscribers will soon reach the 1 billion mark. In the United States alone, the number of wireless subscribers is projected to grow by almost 17 million subscribers per year for the next 5 years. Contributing to the extensive growth are lower prices, large geographic coverage, prepaid services, and Internet enabled phones. While the actual cost of a basic wireless phone is about $75, most wireless carriers offer their customers a "free phone" with a one year wireless agreement. Is this pricing strategy rational? Explain.

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According to Cahners In-stat Group, the number of worldwide wireless phone subscribers will soon reach the 1 billion mark. In the United States alone, the number of wireless subscribers is projected to grow by almost 17 million subscribers per year for the next 5 years. Contributing to the extensive growth are lower prices, large geographic coverage, prepaid services, and Internet enabled phones. While ...

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