As far as I can tell, all eight carriers that support cellular service on Apple Watches have the same standard policy: service costs $10 per month. In general, watch service is only available as an add-on (e.g., stand-alone plans are not available), and carriers only offer the add-on to postpaid subscribers. Plans offered for other eSIM-based smartwatches generally follow the same $10 per month standard. Why?
Providing service for watches shouldn’t cost network operators much. Most people barely use data on their watches. Demands watches place on networks are minimal. The marginal cost for a network operator provisioning an eSIM should be close to $0.
In an open and frictionless market, I’d expect competition to drive down the price of smartwatch plans. For some reason, that isn’t happening (at least in the United States). I wonder if carriers that offer the Apple Watch have to agree to artificially keep watch service plans at $10 per month. However, it’s hard to square a policy like that with Verizon’s recent changes to some of its plans. Subscribers on Verizon’s Do More Unlimited and Get More Unlimited plans are now eligible for a discount that brings smartwatch service down to $5 per month.
I’m baffled. If you know what’s going on, please leave a comment.
There would be some usage costs, but also, don’t forget e911 fees.
Good point Adam! That cuts against my zero marginal costs argument.
Looking at a Verizon bill, it seem like VZW charges smartwatch e911 fees as further costs added onto the $10 per month base price. I guess I’m still racking my brain trying to figure out why we haven’t seen more competition on the base prices of these plans.
It would be interesting to see some info on usage (or usage costs) on smartwatches. I’d guess the median user of an LTE smartwatch consumes a more-or-less trivial amount of data. I suppose there could be some rare heavy data users though that drag average data use up to something that’s not entirely trivial.