By Thomas Gryta
AT&T (T) is cutting prices on its wireless plans for the
second time this year, amid an aggressive campaign for its
customers by smaller rival T-Mobile US Inc. and a longer running
goal to move subscribers away from phone subsidies.
The cut, effective Sunday, lowers the monthly cost of a plan
offering unlimited calls and texts on one smartphone, along with
two gigabytes' worth of Internet use, by $15, a drop of 19%. But to
get the break, subscribers must either use a phone they already own
or pay full price to buy a new one.
The move comes just a day after T-Mobile (TMUS)went the other
direction and boosted the price for its unlimited data plan.
AT&T doesn't offer new customers an unlimited plan, aiming
instead to cash in as wireless Internet use grows. For now,
smartphone users typically don't consume more than two gigabytes a
month.
T-Mobile spent years bleeding customers to market leaders
Verizon Wireless (VZ) and AT&T. But it began aggressively
adding subscribers last year by doing away with contracts and
sharply criticizing AT&T in television ads and during,
sometimes, profanity-laced appearances at industry conferences.
AT&T and Verizon have responded to T-Mobile's success by
moving away from contracts themselves and lowering prices on some
plans. Last month, AT&T sharply cut the cost of some plans
where families share large buckets of data, as long as those
subscribers don't receive subsidized phones.
The new price cut allows customers to get one line and two
gigabytes of data for $65 a month, down from $80, or to get two
lines and share the data for $90 a month, down from $105. AT&T
also continues to offer a $100 credit to new or existing users who
add a line of service.
The new rates are significantly cheaper than those at Verizon,
which sells a line with two gigabytes of data for $80 a month as
long as subscribers buy their phones at full price through the
carrier's installment plan.
T-Mobile sells a line with three gigabytes of data for $60 a
month, also requiring subscribers to bring or buy their own
phone.
Major wireless carriers previously had subsidized the cost of
new smartphones by hundreds of dollars, in return locking customers
into two-year contracts that made up for the up-front expense with
higher monthly service fees.
Shifting away from contracts makes it easier for subscribers to
switch carriers, but it also gets carriers out from under the
burden of providing the subsidies, an expense they have been eager
to shed.
In place of subsidies, carriers are offering payment plans and
trade-in programs that spread out the cost of new phones and enable
more frequent upgrades.
AT&T will continue to offer contract plans and subsidized
phones.
Write to Thomas Gryta at thomas.gryta@wsj.com