AT&T cuts Mobile Share Value prices, T-Mobile adds data to Simple Choice plans

T-Mobile US (NYSE:TMUS) and AT&T Mobility (NYSE:T) continued dueling in the market by changing their pricing for individual customers over the weekend, an indication that the price war that has enveloped the industry is not abating, especially at the lower end of the market.

T-Mobile struck first and said that its "Simple Choice" no-contract customers will now be able to get unlimited voice, texting and 1 GB of LTE data before throttling for $50 per month, up from a previous allotment of 500 MB. Customers can now get 3 GB of LTE data, including tethering, for an additional $10 per month per line (up from 2.5 GB previously), or 5 GB for an extra $20 per month per line. However, T-Mobile increased the cost of its unlimited data service, to $80 per month from $70 before, though the new unlimited plan now comes with 5 GB of tethering, double the previous amount.

T-Mobile said the increased cost of its unlimited data service reflects increased traffic on its network. T-Mobile said its customers use nearly 50 percent more data now than they did just a year ago when it first launched Simple Choice, and that monthly usage on unlimited LTE plans has nearly doubled to more than 5 GB.

Further, T-Mobile said it is now delivering unlimited international texting to virtually anywhere--from the United States and more than 120 countries and destinations around the world--at no extra charge. Additionally, T-Mobile is adding seven more countries and destinations where postpaid Simple Choice customers enjoy unlimited data and texting while traveling, and flat-rate calls for 20 cents per minute, bringing the total to 122 countries and destinations. According to TMoNews, the new countries and locations are Afghanistan, Guam, Honduras, Macao, Uganda, the Canary Islands and San Marino.

Meanwhile, AT&T cut the price of an introductory-level "Mobile Share Value" plan by $15. The new plan offers single-line customers unlimited voice and texting, 2 GB of data, 50 GB of cloud storage and unlimited international messaging for $65 per month, down from $80 previously. AT&T also cut the price for two lines to share that data, from $105 to $90.

Mobile Share Value plans are targeted at no-contract customers. Customers can get the plans by purchasing a new smartphone for no down payment with AT&T's "Next" handset upgrade program with monthly installment payments; bringing their own smartphone; buying a smartphone at the full retail price; or switching to the new plan when they are no longer under contract.

The new changes come after AT&T cut the price of more expensive family data plans in February. They also come on the heels of Verizon Wireless' (NYSE:VZ) decision to update its shared data plans by changing the name of the plans from "Share Everything" to "More Everything" and increasing the data allotments for some plans. Verizon also gave a discount to customers who use its "Edge" handset upgrade program.

Sprint (NYSE:S) is also getting into the game with its cheaper "Framily" plans and recently lowered pricing on its Boost Mobile prepaid service as part of a promotion. Under Framily, Sprint customers pay $55 per month per line for unlimited talk, text and 1 GB of data. For each new Sprint customer joining a Framily group, the cost per person will drop $5 a month up to a maximum monthly discount of $30 per line. A group of at least seven people will get unlimited talk, text and 1 GB of data for $25 per month per line, excluding taxes and surcharges. In addition, Framily members can each pay $20 per month per line to buy unlimited data plus get a new phone every year, or they can add 1 GB or 3 GB per month to their plan.

In a research note, Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote that the changes are "an indication that competition is rising for lower-end, less data-centric, single-line customers."

"We believe that T-Mobile's higher data allowances on the lower-end plans increases its value proposition versus Verizon's $60 1 GB single-line plan and Sprint's $55/1 GB Framily plan," they wrote. They also added that T-Mobile's price increase on its unlimited plan is "a sign of management's confidence in company's gross add trajectory and as an indicator of strong 1Q performance."

In terms of AT&T, the Jefferies analysts think the changes are "a response to T-Mobile's changes targeting low-end, less data-centric, single-line customers, a minority of AT&T's customer base. Even with the plan change, AT&T remains at a premium to T-Mobile's plans, though the gap is smaller." They noted that "AT&T also eliminated the 8 GB Mobile Share Value Plan, which in our view, highlights the company's confidence in its ability to attract family plan subscribers."

For more:
- see this T-Mobile release
- see this AT&T release
- see this WSJ article (sub. req.)

Related Articles:
Sprint partners with Facebook to promote its 'Framily' plans via new app
AT&T's Stephenson: Device subsidy model is 'fundamentally changing'
Analysts: AT&T's cut in Mobile Share family pricing targets T-Mobile, Verizon
T-Mobile notches 1.6M new subs in Q4, will shutter 3 MetroPCS CDMA markets this year
Verizon cuts prepaid prices, data allotments with new 'AllSet' plans
Analysts: Verizon's 'More Everything' plans show No. 1 carrier isn't immune to price war

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