After a multi-year truce, the major wireless carriers are back to price wars. Consumers should be the big winners as they try to pick the best wireless plan–or at least the cheapest wireless plan.
This week, AT&T announced new unlimited data plans that are about 10% cheaper than the offerings they replace. That followed similar price cuts at Verizon announced in August. T-Mobile, which was already charging less than its two larger rivals, hasn’t made an across-the-board cut, but last month it introduced cheaper plans for people age 55 and over.
AT&T, Verizon, and T-Mobile also debuted better trade-in deals for customers switching to their services and who want to buy an iPhone this year—up to $700 off in some cases.
From 2015 to 2017, the industry engaged in deep price wars as T-Mobile and Sprint aggressively sought to steal customers from AT&T and Verizon. Those battles led to the elimination of data overage fees.
With the new wave of unlimited plans, customers who use too much data simply have their downloads slowed instead of being hit with surprise charges on their monthly bill. But as T-Mobile and Sprint focused on trying to merge their businesses, and all of the carriers sought to appease Wall Street investors, the price cutting abated over the past two years.
Now it’s back.
The price cutting comes as several cable companies, including Comcast, have been widely advertising their own new wireless services, particularly marketing lower prices. Churn, the industry’s metric for the percentage of customers who defect, has also been ticking higher over the past few quarters. At AT&T, for example, annual churn for regular monthly wireless customers has risen for six quarters, though it is still under 1% per month.
The carriers may also be preparing for next year when they have more widely available high-speed 5G service. At that time, consumers may be more eager to upgrade phones and even switch carriers to get connections that are 10 to 50 times faster than the average 4G LTE connection. Attracting more customers now may give the carriers an advantage before the 5G wars begin in earnest in 2020.
Under AT&T’s new entry-level unlimited plan, called Unlimited Starter, customers pay $65 per month for one line and $140 for four lines, versus $70 to $160 under the current Unlimited & More plan. Over one year, a subscriber with a four-line account would save $240.
The new Unlimited Extra plan, which includes more high-speed data for downloads, costs $75 to $160 per month, down from the comparable Unlimited & More Premium plan that cost $80 to $190 with similar features. AT&T is also adding a new third tier, following the Verizon model, that will cost $85 to $200 per month, and include HD-quality video streaming and free access to HBO.
With the new pricing, AT&T falls just about in the middle between rivals Verizon and T-Mobile. Verizon’s current line up goes from $70 to $90 per month for one line and $140 to $210 for four lines. T-Mobile’s range from $60 to $85 for one line and $120 to $200 for four lines. Sprint, which has been shedding customers as in waits to possibly be acquired by T-Mobile, charges from $60 to $80 per month for one line and from $100 to $180 for four lines (partly due to a limited time promotional discount).
One change in AT&T’s new plans is less great for customers, however. The carrier will no longer bundle its video streaming service called Watch TV with all its unlimited plans. AT&T is focused on rolling out a far more comprehensive HBO Max service and may be phasing out Watch TV, analysts say. AT&T hasn’t said what it plans to do with Watch TV yet.
But only premium unlimited customers appear likely to get free access to HBO Max when it arrives next year, a somewhat odd strategy since AT&T has said it spent $108 billion on Time Warner in part to bolster its wireless business. Verizon opted not to buy a major entertainment company and instead recently struck a deal to give its wireless customers free access to Disney’s new Disney+ service. Likewise, T-Mobile gives its unlimited customers free Netflix.
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