AT&T vs. T-Mobile: How Low Can Rates Go?

NEW YORK (TheStreet) -- With T-Mobile (TMUS) aggressively leading the way, monthly smartphone service rate plans in the United States have been dropping. T-Mobile started the trend with competitors AT&T (T), Sprint (S) and Verizon (VZ) being forced to follow, and in some cases kicking, scratching and complaining.

Almost immediately, T-Mobile's "UnCarrier" promotions saw tangible results. In 2013, after announcing discounted plan pricing, T-Mobile was able to add customers for the first time in four years and three quarters in a row. Now, T-Mobile is raising the stakes by tweaking some of its offerings and again prompting an almost immediate response from at least one of its competitors.

Shares of T-Mobile were down 0.26% to $30.71 in early trading on Monday.


Late Friday, T-Mobile announced it will be doubling the amount of high-speed, 4G/LTE, Internet data it offers its "Simple Choice" plan customers without raising monthly fees. That means customers now paying $50/month and getting 500 megabytes of 4G data will see their data limits jump to 1 gigabyte of LTE.

After reaching the new limit, customers will still see data throttled-back to 3G speeds for the remainder of that month. The next tier of T-Mobile customers who currently pay $60/month will see their 4G/LTE data limit raised from 2.5 GB to 3 GB before throttling. The new data offerings go into effect on March 23.

T-Mobile also added unlimited International text messaging from the United States (to most countries) in addition to its unlimited talk and text plans.


T-Mobile raised some prices. Customers currently getting unlimited 4G/LTE data will be allowed to keep their additional $20/month pricing. But new customers will now have to pay $30/month for the unlimited LTE data and 5 GB of wireless tethering.

AT&T answered by lowering its prices for some of its most popular service plans. AT&T customers who have one phone and no annual service contracts will see their monthly bills drop to $65 from $80 for 2 GB of 4G/LTE data, unlimited voice calls, texting, International messaging and 50 GB of cloud storage. That same offer jumps to $90/month for two smartphones.

Verizon also saw fit to offer new deals, including "Share Everything" data plans ranging from $40/month for 500 megabytes of shared data, $50 for 1 GB, $60 for 2 GB, $70 for 4 GB and $80 for 6 GB. Share Everything is now called "More Everything."

The inter-carrier war has been raging, back and forth, for months. AT&T recently made the first first moves to poach customers away from T-Mobile. Back in January, AT&T started offering $250 gift card bounties for T-Mobile customers who walked into an AT&T store and wanted to trade-in a phone and switch. An additional $200 was offered for each and every line moved.

T-Mobile answered by offering $300 for your smartphone and $350 toward any early-termination fees you might encounter when leaving AT&T, Sprint or Verizon. Both AT&T and T-Mobile deals had other conditions including having to purchase new phones (sometimes at full cost) and agreeing to new, long-term service plans.


Obviously, lower monthly charges are great for consumers. But we still have a long way to go before we can match what people pay for smartphone services in other countries. A recent International Telecommunications Union (ITU) survey shows that the United States still ranks among the highest when it comes to phone data plans.

Last fall, before the current round of price cuts, U.S. phone plans with 500 MB of data cost $85/month. Similar service costs $24.10 in China and only $8.80 in the United Kingdom. Germany, India, Indonesia and Italy were also charging around $10/month for similar service. Austria came in at $4.70 month.

-- Written by Gary Krakow in New York.

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