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With Pressure From T-Mobile And AT&T, Will Verizon Follow Suit and Cut Prices?

AT&T Inc.’s plan to cut prices on its large shared data plans could prompt other U.S. carriers, particularly larger rival Verizon Wireless, to offer new discounts, analysts said.

The No. 2 U.S. mobile-services provider said recently it would slash the monthly fee for its 10 gigabytes per month data share plan aimed at families to $15 per phone from $40 per phone.

Including other charges, this would mean that a family of four would pay $160 per month or $100 less than Verizon Wireless or $80 less than Sprint Corp. and $20 less than T-Mobile US for a comparable service, according to AT&T.

AT&T’s move follows recent price adjustments at the top U.S. wireless providers as they attempt to sustain growth in a mature market built on stealing growth from competitors.

“It is too soon to see if others react. With these plans, AT&T is still at a premium to Sprint and T-Mobile US, but a clear discount to Verizon,” Wells Fargo Securities analyst Jennifer Fritzsche wrote in a note.

“(Verizon) will be the one to watch, in our view as they have been on record saying it would react to price moves if they felt the need.”

AT&T has been fiercely competing with smaller rival T-Mobile US. After T-Mobile spent several quarters directly marketing to AT&T customers, AT&T recently offered to pay T-Mobile customers to switch to its service.

T-Mobile’s announcement last month that it would pay up to $650 for early termination for customers switching from AT&T, Sprint or Verizon “may have pushed AT&T too hard”, making it fight back, J.P. Morgan Securities analyst Philip Cusick said.

AT&T’s new pricing plan also targets Verizon’s “prized” family plan customers, Jefferies & Co analyst Mike McCormack said.

“The back and forth in price cuts is a negative for the entire wireless industry,” J.P. Morgan’s Cusick said.


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