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back to article AT&T takes aim at T-Mobile with $450 cashback lure

US mobile phone users could have a very happy 2014 after AT&T effectively declared war on T-Mobile in an effort to stop the upstart carrier from winning over its customers. Next week at CES, T-Mobile is widely expected to announce a deal whereby the company will offer new customers some form of recompense to offset fees incurred …

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US mobile and internet services are a rip-off compared to some parts of the world. It's basically large corporations screwing the consumers because they can. People might complain about VirginMedia, but it's interesting that for the same amount (+/- exchange rate fluctuations) that Comcast charge in California for internet and phone, VM throws in their XL TV too. I think the VM broadband speed is faster, too.

For light users, T-Mobile's US offering is more expensive - the all-you-can-eat tariff is fine if you make (or receive, such things are chargeable in the US) a lot of calls but less so if you're an occasional user. The prepaid/PAYG market is primitive, they still have minutes that expire based on time, rather than simply imposing a requirement to demonstrate the number is still in use often enough that they don't reassign it.

Good on them for shaking things up a bit, corporate America has gotten too used to imposing the rules rather than providing what the customer wants.

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They're able to screw users here, because people are clueless about data plans. I had a guy tell me he bought his iPhone from AT&T and was so happy he didn't pay Apple a dime! With idiocy like that, they're making money hand over fist.

I like the service & pleasant attitude of T-Mobile versus Verizon's horrid attitude of trying to stick the customer every way they can.

I like $30/mo PAYG for 5GB vs. $98/mo 2yr contract with 2GB hard cap and no texting or tethering.

I like a billing/service website that has no ads whatsover, and actually works, as opposed to Verizon having more ads than the Sunday paper, and which crashes or hangs half the time.

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I like $30/mo PAYG for 5GB…

I think you'll like $15 for 5 GB even more, which is probably closer to many European PAYG prices. And properly unlimited for around $ 25.

However, can you hear the rush of lawyers to the FTC / ITC / FCC to to do something about these pesky upstarts?

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Anonymous Coward

"They're able to screw users here, because people are clueless about data plans"

Actually, no. It's because American style Ferenginomics dictate that the needs of the corporates outweigh the needs of the many.

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The "T-Mobile" of France, Free, which started being a "T-Mobile" many, many years before T-Mobile, has just upgraded their all-inclusive mobile offer (unlimited national, US, China, Canada cell minutes, unlimited international hardline minutes to something like 50 countries, unlimited national txts, unlimited data). Before you had 3GB of 3G before the speed was downgraded. Now you get 20GB of 4G before you get downgraded. The price hasn't changed at 20€/month, no minimum contract period. There is a slight catch (shared by all French operators) but you can't have everything - roaming bites you hard... Free has shown the world what happens when you get real competition in a line/data market (both wired and wireless). The three existing providers all slashed prices when they came into the market, and are continuing to do so when Free brings in new offers/features.

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"They're able to screw users here, because people are clueless"

That's all that needed to be said, right there.

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Re: "They're able to screw users here, because people are clueless about data plans"

Ferenginomics

Haven't heard this (very accurate) comparison in a long time.

Well done, sir!

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"Latest and most popular qualify for $250"

So they're talking about the ones that would sell on EBay for $400+ then?

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Re: "Latest and most popular qualify for $250"

Well yes, but they're hoping you'll see the $$$ signs and ignore that.

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A free market? In the United States? Gosh...

Verizon and AT&T aren't losing their fancy high-end handset customers to T-Mo, because T-Mo isn't luring these customers. Why? Because taken individually, a customer with an iPhone 5S or Galaxy S4 actually costs you money, money you have to recoup from other customers.

So T-Mobile are poaching the the ones who use a basic voice phone, and pay way too much for their service; the ones who use a budget Android or WinPhone, and don't use a lot of data, yet still pay too much for their service -- basically, T-Mobile is luring away the customers who've been propping up the whole house of cards.

AT&T and Verizon are tied into contracts with Apple regarding iPhone that only work if both operators can offload the costs of those phones onto non-iPhone using customers. This was fine for as long as "the other guy" was playing the same game (heavy handset subsidies, paid for with lockins to expensive monthly charges), but T-Mobile has broken formation, and it's hurting them badly.

Biggest loser, long term, is Apple. Their high pricing depends on a sales model where the customer never sees the real price. If the rest of the US carriers follow T-Mobile's lead, it's good for Samsung and Nokia/Microsoft, who have a range of mid-price and budget phones, but it's a disaster for Apple.

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Headmaster

@Kristian Walsh Regarding Apple's business model in the US.

".... the rest of the US carriers follow T-Mobile's lead, it's good for Samsung and Nokia/Microsoft, who have a range of mid-price and budget phones, but it's a disaster for Apple."

I think that if this continues and the Telcos' stranglehold on the retail mobile phone market itself is broken then you may well be right. Apple's focus on one price segment in the US (the very core of their business) would not have been the huge success for them that it has been without operator lock-in, the close to cartel conditions in the services market and the near monopoly hold over the retail phone market that the carriers have. It is an observable fact that the pricing and subsidy models used by the US carriers require that the deals available for the high end flagship phones (all such, not just Apple's) in fact are not subsidised by the carriers but by the rest of their poor benighted customers. If this new dawn is indeed breaking then any producer without the full range of price points in their portfolio will indeed, as you point out, have a problem.

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Re: A free market? In the United States? Gosh...

Except that your entire premise is based on the fact that you think $200 in parts and labor (iSuppli) should be marked up 300% and yet somehow they are losing money.

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Anonymous Coward

About time

Mobile pricing is absolutely insane. I really don't understand how the welfare people actually afford them.

Here's hoping that there actually is a price war.

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Re: About time

There are plenty of obscure carriers who charge $40 or less a month and throw in a very basic smart phone. Boost, Virgin (America) Cricket and a few others.

I have the $50 plan and an older middlin' smart phone. Does all I need for now.

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Mushroom

T-Mobile vs AT&T

Frankly, my experience in the USA with the AT&T telephone customer service (wired and cell) has been so terrible that I'd pay T-Mobile to switch to them. The only thing that AT&T have going for them is coverage outside the cities in the USA and even that is not enough to offset the mind-numbing, soul-destroying hassle of dealing with their customer service. I assume that the perpetual "Due to unexpectedly heavy call volume ..." messages that I get when I call AT&T is due to people calling to cancel their contracts.

That said, I have nothing but praise for the AT&T Internet tech support techs who know what they are doing, answer the phone and get stuff fixed when it breaks.

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Pint

t-mobile rocks....

Seriously though, I just moved from PAYG ($1/$2/$3 day of use) to the (no contract) $50/month.

All plans give unlimited voice/text/internet. All that changes is how fast the first block is.

My plan is 500 MB at 4G speeds, and then 2G unlimited. The next bump $60 is 5G and $70 is unlimited.

But I spend a lot of my time where there is wifi so....

And better still you can use your phone in Europe with no data charges....;-)

Now if ONLY I could get rid of AT&T which I need for local phone service to use DSL, I would be thrilled.

P.

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Anonymous Coward

Re: t-mobile rocks....

UK, Unlimited Data, Unlimited Text, 500 mins Voice, £10 ($15) a month. - One month rolling contract.

Yes - you need to bring your own SmartPhone (Nexus 4 @ £250 - $375).

Oh and yes I can tether my laptop with no issues!

Can't believe how much my US cousins are getting ripped off......

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Re: t-mobile rocks....

"Can't believe how much my US cousins are getting ripped off......"

That's because we have true capitalism! "Free market" means free to eff you up the arse without consequence! It's our corporate god given right!

What are you, some kind of commie?

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Re: t-mobile rocks....

I have the same T-Mo plan that costs $50 a month, but you add a 2nd line for $30, and a 3rd line for 15, and a 4th line for 5 (or something close to that, that equals $100 a month) So I pay $25 a month for our families 4 lines. Each additional line costs the minimum so when my youngest needs a phone we'll tack on another, so the price per line goes down further. We yanks aren't all getting ripped to badly, accounting for exchange rate differences.

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AT&T is clearly uncomfortable with T-Mobile's 2013 growth and the potential for what they may promote at CES. While you can get cash for turning in a T-Mobile phone and cash toward a new AT&T phone, you still face the same AT&T conditions services, and capped data, that were present before they offered T-Mobile customers this bribe. And the fact that they are specifically targeting T-Mobile customers (not Verizon or Sprint), means that it is in fact, T-Mobile, that AT&T is most concerned with. I don't see very many T-Mobile customers bouncing to AT&T for this offer. The short term benefits aren't worth the long term headaches.

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Currently, T-Mobile is a threat only to themselves. They're right on the cusp of accelerated growth, but the obscene costs of that growth have killed more than a few strong companies.

What AT&T is doing is increasing the costs of growth for T-Mobile. They're making an already tremendously expensive proposition even more expensive in hopes it will stunt growth opportunities for T-Mobile and prevent them from becoming a viable threat in the future.

It's not that AT&T is responding to T-Mobile, there trying to pull the rug out from under T-Mobile so they never do actually have to respond. Fighting off competition by increasing their costs is a normal and accepted practice and it's one of the primary risks in engaging in competition with embedded interests. Financial leverage trumps products, service and overall quality every time, as you can't offer those things if all your funds are going toward costs your competitor has created.

The upshot for T-Mobile is that AT&T obviously sees them on a direct intercept course and is acting now to reduce T-Mobile's resources before the real battles begin. If T-Mobile doesn't run out of money it could get very interesting.

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Thing is, couldn't that be construed as dumping: selling at a big loss so as to drive out competition? If so, AT&T can't keep the promo up for too long before either they lose too much to keep it up or the SEC starts asking questions (and remember, AT&T already has a strike against it with the SEC for the hand-smack they got for trying to buy out T-Mobile). In either case, T-Mobile need only weather the storm for a short time. T-Mobile's current plans have a longer reach and are paying off already; furthermore, they're playing the image card against AT&T, which can make this "incentive" backfire if it makes AT&T look desperate.

I was once with AT&T (through Cingular), but their rates have never been acceptable for me (not even prepaid). I was happy with T-Mobile for two years, then went to a T-Mobile-based MVNO that gives me unlimited talk and text and 1GB of high-speed data (which is more than enough for me, plus EDGE data is free) for $45 after taxes. I may switch back to T-Mobile if they can present a nice plan that includes Visual Voicemail (plus they properly support short codes), but for now I can wait.

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You know T-Mobile is already a massive company in the rest of the world? I doubt AT&T could pull that trick easily.

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"Thing is, couldn't that be construed as dumping:"

The term you are looking for is "predatory pricing" and it's quite legal as long as you can get away with it. And even if you don't, the cost of being caught is often literally, orders of magnitude below the final gains.

Or do you still labor under the outdated assumption that corporations have to follow some kind of rules when dealing with customers?

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AT&T at one time built almost half of the worlds phone systems, only then it was The Bell Telephone Company and Western Electric.

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There's predatory pricing (better known as loss-leading) and then there's dumping (bleeding so as to make your competition bleed itself out). Dumping IS NOT allowed under anti-competition laws AND the SEC already has AT&T under scrutiny because they disapproved of them buying out T-Mobile. If T-Mobile cries foul (especially since THEY were the target of the failed buyout), there's a pretty good chance the SEC would then put AT&T under the microscope for potential anti-competition violations.

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Childcatcher

T-Mobile has seen stellar growth since it stopped trying to sell itself off and decided to shake up the market instead.

Providing things that customers want instead of what the marketing-financials couple from hell comes up with actually means success: SHOCKER!!

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No shit, right? This fad of letting finance and marketing is nothing more than poor leadership. Those two things are very easy to quantify, so they're popular with the MBA's who actually know fuck-all about business.

If you look at the commercial empires of the past, many still alive and well today, you'll never find some jackass in finance or marketing calling the shots. The senior management called the shots and it was on the finance guys to figure out how to make it happen. If they couldn't figure it out they were not fit for purpose.

Contemporary business managers and politicians have fallen into the logic trap that is analytical management. They've got absolutely no vision of where they're headed and no ability to manage toward that vision even if they did.

It's the worst sort of 'leader' who will not take risks and requires digital, yes/no, 0/1 data points to make decisions. It is quite nearly impossible to get yes/no answers in business without severely distorting reality. It's funny to me because they truly believe they're managing to reality and can't see that their perceived reality is a complete fabrication. They are, in fact, doing exactly what their spreadsheets tell them not to do.

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Indeed its true, most managers have no idea how to manage anything but the most mundane common sense decisions. They live on reports and numbers and can not look out into the actual world and make a decision for themselves. Most managers have to do this, because they are not in fact good managers, a good manager is very hard to come by.

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Good managers are hard to find! Partly because a good manager will take risks. Nobody wants to take risks because they're unable to defend that decision in the face of challenge from further up the chain. The decision itself, whether right or wrong, is what defines a leader, the willingness to make a call and see it through.

Good managers are also rare because I believe there's a serious lack of definition for what that word means, what it entails. I don't have all the answers, but I do know what they're teaching kids at University certainly isn't anything a good manager needs to do. They're not teaching risk management, they're teaching risk avoidance and that's probably the least useful thing a manager could possibly do.

In my own career, and now my own business and inside my organization, I consider effective managers to be enablers for their staff. I define the strategy and it's up to my managers to design the tactics that see that strategy realized. The manager is there to provide general guidance, but most importantly they're there to remove barriers that are hindering their staff.

I don't accept reasons for why things can't be done, they have to be done. But I'll gladly listen to my managers tell me what their staff need to get those things done. It's not my place to figure out how to do something, that's the managers job, and I, as the chief manager, remove barriers for my managers. It all works nicely.

It's also why I don't normally put the most technically gifted people in organizational management roles. I believe good managers should be competent in their field of responsibility, but I don't want them thinking tactically, which is what technically excellent people automatically do. I want manager who creates and enables strategies within their departments and have the technically superior staff tell him what they need.

Good managers don't need to 'motivate' or 'drive' their staff, they need to enable them and take risks when necessary. Lead the entire team forward, not hold them in place with risk avoidance.

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@ Don Jefe

....Are you accepting resumes?

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Joke

CBL leads to LBC

So, it seems AT&T's "right choice" is to respond to the cash back lure with a lash back cure. (joke joke)

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Looking over their shoulder.

Those high prices are causing consternation in the states.

They might need to at least show they are competing to stem price fixing accusations.

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Keeping the pricing upwards.

And yes, any fool who falls for this bait help prevent competition.

Always best to go with those who really compete, not those who try to plug leakage.

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Re: Keeping the pricing upwards.

Normally I'd agree 100%, but the mobile market in the US is so deeply defined by anti-trust law that strategic growth is nearly impossible. The rules of the market have moved the competitive elements of the business away from things like products and services and into things like leakage control.

It's a competition to see who loses the least money instead of who makes the most. They can't compete at a national or regional level, so they engage in trench warfare in each and every city where they cross paths. What this means for you and I, is that we aren't being presented with truly competitive offerings because customer revenue is needed to fund the obscenely expensive war the carriers are fighting.

I'm a firm believer in reasonable and effective regulation. If nothing else it acts as a filter to block businesses that are adaptable to fit reality. But regulation has to be effective. Anti-trust competition regulation for mobiles isn't well suited to the way they do business, or even their products. Everything changes when you've got no wires attached and regulations should reflect that.

The laws designed to protect the consumer are having the exact opposite effect as mobile carriers are engaged in wholly surreal and insanely expensive tactics to outmaneuver each other. Effective legislation wouldn't 'save the consumer money' but would allow the consumer to get more direct value for their money instead of their money going into the war chest of their carrier.

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At last!! Perhaps these goliath phone companies will actually work for their customers.

If only we could find a way for the Music companies to suffer the same fate...

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Too many suckers in the market. The music companies can make more than enough just on them to care about anything else.

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