AT&T vies for T-Mobile clients with incentives to switch carriers

January 3, 2014

AT&T on Friday offered T-Mobile customers up to $450 in incentives to switch carriers, the latest salvo in a fierce industry battle that is creating fresh opportunities for consumers.

AT&T said the immediate offer includes $200 for each T-Mobile wireless phone line and $250 for device trade-ins. Customers who switch can choose a no-contract plan or the more expensive annual contract, which includes bigger data and voice limits.

The offer comes ahead of expectations that T-Mobile, the feistiest of U.S. wireless providers, will soon announce a similar plan to steal AT&T and Verizon Wireless customers by picking up their penalty fees for breaking long-term contracts.

The sudden effort to woo subscribers away from their long-term commitments highlights the challenge of carriers to grow their businesses in a saturated market where the number of wireless contracts exceed the U.S. population.

T-Mobile, the nation’s fourth-largest wireless carrier, has taken advantage of the tight market conditions by offering lower prices, no contract services and cheap overseas calling and data plans. Those moves have forced the biggest carriers to respond with lower prices and greater flexibility for consumers who commit to a carrier because of the exclusive offering of a particular device.

“The dimensions of competition in the wireless space are collapsing,” telecommunications industry analyst Craig Moffett wrote in a recent report. “Carriers used to compete based on handset selection, network quality and price. Handset selections no longer vary materially between carriers, and network quality is becoming a more nuanced concept as the industry upgrades to LTE.”

In its third quarter, T-Mobile said it added 1 million subscribers, bringing its total to 45 million. That’s less than half the size of Verizon’s and AT&T’s customer bases. But the growth rate has sent shivers through the industry, analysts say. AT&T said it added 363,000 subscribers in its third quarter, and Sprint lost 360,000 users.

Cecilia Kang is a staff writer covering the business of media and entertainment.
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