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AT&T Forced To Cut Prices As Smartphone Plan Wars Intensify

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When competing companies go after each other, it’s normally the customer who wins in the end. That’s exactly what’s playing out as T-Mobile (NYSE: TMUS) continues its plan to disrupt the space.

AT&T (NYSE: T) announced on February 1 that it was dropping prices for customers who sign up for a family plan on any of the company’s Next plans. The Next plan is AT&T’s no-contract plan where you pay a monthly rate without being forced to sign a contract.

However, you’re responsible for the full price of the smartphone you choose. You can either pay the full amount up front or sign a contract where you pay 20 or 26 payments.

According to re/code, some customers could see as much as a $100 per month reduction. The discounts apply to families on a shared plan of 10GB per month or more.

But what has AT&T in such a giving mood? It’s not so much about giving as it is competing. The #2 carrier in America is bowing to the peer pressure from T-Mobile—a company that has gained significant market share from the top two carriers with its no contract plans.

Recently, T-Mobile has turned up the heat even more by offering to pay off the contracts of customers who are willing to switch to its service from their existing carriers.

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If you watched the Super Bowl on Sunday, you saw this ad that featured text on a pink background touting its “un-contract” stance. The first frame simply says, “Wireless contracts suck.” As the ad continues over the audio backdrop of “Whistle Stop” from Disney’s Robin Hood, a later frame says, “Switch to T-Mobile and we’ll pay off your contract.”

“Break up with your crummy carrier and we’ll pay for it,” continues the bluntly-worded ad that followed earlier spots, which featured Tim Tebow in a spoof on not having a contract.

While entertaining, this is another example of how T-Mobile is redefining how the cell service business model works. AT&T’s Next plan, Verizon’s Edge plan, and the continued price wrangling prove that things are changing in the cell space and even if you aren’t a T-Mobile subscriber, you can thank the company for putting major dollars into forcing its larger rivals to offer more customer-friendly options that don’t include a contract.

That doesn’t mean T-Mobile will unseat AT&T or Verizon from their #1 and #2 spots, but it doesn’t have to in order for consumers to win.

Disclosure: At the time of this writing, Tim Parker had no position in the companies mentioned.

Posted-In: AT&T Inc. T-Mobile VerizonNews Contracts Events Tech Best of Benzinga

 

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