Is AT&T Mobility (NYSE:T) taking a swipe at T-Mobile US' (NYSE:TMUS) "uncarrier" strategy to charge full price for handsets and eliminate contracts? It sure looks that way.
For the next week, through June 30, AT&T is taking 50 percent off the price of many smartphones ordered online, provided the buyer agrees to a two-year contract and signs up for a qualifying voice and data plan or Mobile Share plan. Those qualifying plans include a minimum $39.99 monthly voice package (for 450 minutes) with a minimum $20 data package (covering 300 MB of data) or else a minimum $85 Mobile Share plan. Buyers taking advantage of the offer avoid paying the regular activation/upgrade fee of $36 per line.
The smartphones being offered carry a range of regular subsidized prices, from $0.00 to $199.99, and are models with lower storage capacity. For instance, the offer applies to the Apple (NASDAQ:AAPL) iPhone 5 with 16 GB of capacity but not the 32 MB or 64 MB versions.
AT&T's current contract-based smartphone pricing promotion could not be further from those of its former acquisition target, T-Mobile, which is attempting to shake up the U.S. market by being the "uncarrier" and pushing no-contract offerings with no device subsidies.
As part of its market positioning, T-Mobile is offering "Simple Choice" device payment plans in which customers can make a down payment and then pay for the remainder of the device's cost in monthly installments. Alternatively, customers can buy their smartphone outright for the full cost of the device, just as they can with other operators.
Customers pondering AT&T's current half-price device promotion will want to consider the overall service cost and level of service they are committing to for the next two years.
To get the 50 percent-off device price, an AT&T customer will pay $60 per month for only 450 minutes of talk time and 300 MB of data over two years. In comparison, T-Mobile's comparable $60 service package includes unlimited voice and text plus 2.5 GB of high-speed data with no contract. T-Mobile also offers unlimited voice, text and data for $70 per month with no contract.
However, while an AT&T customer can get the $16 GB iPhone 5 for $99.99 under the current promotion, a T-Mobile customer buying the same device must make a down payment of $149.99 plus 24 monthly payments of $20 or else pay in full for the device at checkout, forking over $629.99.
AT&T's latest marketing move may be an attempt to quickly capitalize upon its widely reported LTE network speed performance. Last month the operator was cited as having the fastest LTE network among the four national U.S. mobile operators, according to PC Mag/TechHive's survey of wireless broadband performance.
The survey also showed that T-Mobile is seeing improvements from its network modernization effort, which includes the installation of new top-of-the-tower equipment to boost its signal strength. In the same PC Mag/TechHive survey of 3G technology performance, T-Mobile's HSPA network delivered the fastest 3G download and upload speeds of the major national carriers. T-Mobile also offers LTE but has only officially rolled it out to seven markets.
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