Telecom giant AT&T (NYSE:T) is feeling the heat these days in a significant way as competition to acquire high-margin smartphone subscribers has grown all the more fierce in the past several months.
In part, this is due to a resurgent Sprint and, especially, T-Mobile, which have both gone to considerable lengths to challenge the status quo with AT&T and Verizon Communications. Worse yet for AT&T and Verizon, T-Mobile's aggressive pricing is working beautifully. For instance, T-Mobile recently disclosed it added 800,000 customers in the fourth quarter of 2013.
Much of the distaste with the likes of AT&T centers around people's expensive bills. And in order to fix this, AT&T seems willing to experiment with some interesting ideas.
Pay to play
AT&T recently unveiled its Sponsored Data plan in hopes of addressing this issue head-on.
The service, which will act similarly to a toll-free call over a telephone, would have companies actually pay for the cost of streaming something, like, say, a new Netflix show as a promotion, over AT&T's network at no cost to the consumer. The idea here is that in doing so, AT&T would be able to help reduce data usage costs for its subscribers.
In the video below, tech and telecom analyst Andrew Tonner discusses this news in greater detail.
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Fool contributor Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.