AT&T Follows T-Mobile by Splitting Phone Cost From Service Plans

AT&T Inc. (T), bowing to pressure from smaller rival T-Mobile US Inc. (TMUS), introduced a new line of service plans that it expects will save customers $15 a month on average by excluding device costs.

The Mobile Share Value plan, which will roll out on Dec. 8, eliminates subsidies used to lower the price of phones. Users who either own a device or pay for one in installments can start at $45 a month for 300 megabytes of data, along with unlimited text and talk, according to a statement today. AT&T’s current price for a similar plan is $70, whether or not the customer already has a phone.

Competition is escalating with T-Mobile, which has sought to shake up the industry with no-contract plans, phone financing and lower-cost international roaming rates -- all part of its “un-carrier” campaign. T-Mobile added about 650,000 monthly customers in the third quarter, following the loss of more than 2 million subscribers last year.

“This is the clearest sign yet that AT&T is scared of the traction T-Mobile is getting among young people,” said Tero Kuittinen, the New York-based head of sales and marketing for Alekstra, a mobile-diagnostics company. “AT&T has a good grip on families with multiple accounts, but they are getting worried about how T-Mobile is making inroads among twentysomethings.”

Users can add an additional phone to AT&T’s new plans for $25 a month and tablets for $10.

Shares of Dallas-based AT&T, the second-largest wireless carrier, slid 1 percent to $34.25 at the close in New York. The stock had risen 1.6 percent this year. T-Mobile fell 2.3 percent to $26.30.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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