AT&T Again to Trim U.S. Wireless Prices

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.

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