January 17, 2010

AT&T, Verizon In Price War

A price war broke out late last week in the wireless industry, as Verizon Wireless and Dallas-based AT&T Inc. traded cuts on some of their monthly plans.

According to a Reuters report, Verizon Wireless, the biggest U.S. mobile service, said it would cut prices 30 percent for voice customers. It was followed by similar price cuts from its main rival, AT&T Inc.

Verizon started the clash by slicing the monthly price for unlimited voice minutes on a single line from $99.99 down to $69.99.

On a single line with unlimited voice minutes as well as unlimited text, photo and video messaging, the monthly fee is falling from $119.99 to $89.99.

All the new plans will kick in beginning Monday and can be ordered the usual ways, either at AT&T stores or via the company's Web site.

In order to get the new rates, customers have to contact their cell phone carriers. Both companies said the new rates don't require a contract extension.

The news comes a year after smaller carriers like Deutsche Telekom's T-Mobile USA and Sprint Nextel unit Boost Mobile introduced lower-cost plans, sparking concerns of a price war.

"Our new plans reflect customers' continuing desire to do more with their phones "“ including talking and browsing the Web at the same time," Ralph de la Vega, president and chief executive of AT&T mobility and consumer markets, said in a statement.

Verizon Wireless has about 89 million customers. AT&T has about 82 million wireless customers.

Independent telecom industry analyst Jeff Kagan said he was surprised it took so long for the two companies to make a move.

He expects more cuts to come for data plans as carriers battle over a dwindling number of wireless holdouts and users who are still clinging to basic handsets.

"The prices of unlimited data plans are going to continue dropping," Kagan said via e-mail to Reuters. "Data plans are the future. Cellphones are not just about voice anymore. Since Apple launched the iPhone three years ago, it turned the industry pricing model upside down."

Neither Sprint Nextel Corp. nor T-Mobile USA Inc., the next two largest wireless providers in the U.S., announced price cuts Friday.

In a statement, Sprint said its existing plans are still cheaper than AT&T's and Verizon's new rates. A T-Mobile USA spokesman declined to comment.

In addition to the price cuts, Verizon will also streamline its phone lineup, cutting back from the roughly 80 phones it has on shelves to 50.

The ousted phones will be those that sell poorly, and the carrier won't drop completely any manufacturer it currently has, a spokesman said.


On the Net: