NEW YORK (TheStreet) - AT&T's (T) latest pricing discount isn't simply designed to secure more customers for its Next service, it's all about defending the Verizon (VZ), Sprint (S) and T-Mobile (TMUS) as the battle for customers goes on.
The Dallas-based company on Saturday started offering a lower-pricing plan touted as its "best-ever prices" for families. AT&T said a family of four switching to the provider can get unlimited talk, text and 10 GB of data or more for $160 a month, compared to $260 a month at Verizon. In addition to the savings, the family would get a $400 bill credit for the four smartphone lines of service added. The offer expires on March 31.
Existing customers looking to add a line, and small businesses with up to 10 lines, can also take advantage of the pricing. AT&T said for a family of two, the price per month would be $130; a family of three, the monthly price would be $145. A family needing more than five lines would pay $15 more per extra line.
AT&T said last week that customers who add a line are eligible for a $100 bill credit through March 31.
"These new plans give customers what they want - our best-ever prices on a best-in-class network," said David Christopher, AT&T Mobility's chief marketing officer. "We're making it easy for families who want it all - great service, great value and big bucket of data to share."
There is a catch. New customers must either purchase a phone through its AT&T Next offering, where customers are not beholden to an annual contract but instead pay for their smartphone device through 20 or 26 monthly installments. Customers are eligible to receive a new device every 12 or 18 months, depending on which installment plan they chose. There is no down payment or fees related to activation, upgrades or financing.
Or customers can bring in their existing smartphone or purchase one at full retail price, the company says. (An Apple iPhone 5S at full retail is $649.99, for instance, according to AT&T's Web site.
AT&T is also trying to get users to go for its bigger data (more expensive) plans. But do consumers really need all that data?
"We believe that one of the goals of the price cut was to drive data utilization, smartphone and Mobile Share adoption higher, leading to a limited pricing discount. During its [fourth] quarter conference call, AT&T highlighted that only 30% of its 21 [million] Mobile Share subscribers (29% of total postpaid subscribers) chose data plans with a 10GB or higher data allotment," Jefferies analyst Mike McCormack writes in a note. "Thus, in order to take advantage of the new offer, customers would have to pick a data allotment that is $10-30 more expensive (lower-end plans are 4GB-$70/6GB-$80/8GB-$90) than what they would have originally intended to purchase, implying a lower net pricing discount."
The pricing adjustment is AT&T's latest to get ahead of its competitors in the battle for customers.
"While much of AT&T's recent pricing activity has been focused on competing with T-Mobile for lower-end subscribers, we believe that the new pricing also targets Verizon's prized family plan customers," the Jefferies analyst writes. "AT&T's new pricing over 24 months is $860 cheaper than Verizon's for a comparable 4 smartphone family plan when accounting for the cost of 4 iPhones. It is possible, but unlikely, that Verizon will respond with an update to its EDGE EIP plan that includes service price discounts."
--Written by Laurie Kulikowski in New York.