AT&T's Fighting a Two-Front War

The nation's No. 2 wireless carrier is fighting off both T-Mobile and Google.

Apr 17, 2014 at 10:15AM

The competition is heating up for AT&T (NYSE:T). The company is fighting a battle for both its wireless services and its high-speed home Internet right now. T-Mobile (NASDAQ:TMUS) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) have all but declared war on the wireless carrier, and there are no signs of letting up.

T Mobile Tablet

T-Mobile's latest promotion of 1GB of tablet data through the end of the year. Source: T-Mobile.

The dogfight in the sky
T-Mobile has brought the fight to AT&T with its Un-carrier promotions -- including everything from cancellation fees, tablet data, monthly pricing, and more. Here are some of T-Mobile's biggest efforts to snag AT&T customers:

  • Paying cancellation fees: Just three months ago T-Mobile offered up to $650 per line for people who switch from another carrier to T-Mobile. AT&T responded with a $450 credit for T-Mobile customers if they switch to AT&T's smartphone plan. 
     
  • Pricing restructure: T-Mobile's been aggressive with its low-cost monthly service plans and cancelled its service contract commitments. AT&T fired back by lowering some of its shared family plan costs by up to 20%.
     
  • Tablet tango: T-Mobile already offers 200 MB per month free for life when users bring their cellular tablets to the network, or buy one from the company. But its recent move upped the free data by 1GB until the end of 2014, and cut the cost of cellular tablets by up to $130. So far, AT&T has yet to respond.

T-Mobile's CEO, John, Legere, has been very vocal about his plans to take on AT&T, with one of his 2014 New Year's resolutions to "give AT&T a break... or not." Legere also crashed AT&T's Consumer Electronics Show party back in January, before he was kicked out by AT&T security.

But responding to T-Mobile's latest moves isn't the only skirmish AT&T's had to deal with. Another war is brewing with an even stronger opponent.

Google Fiber

Google Fiber is up to 100 times faster than the average Internet speed. Source: Google.

The burgeoning land battle
Google's been expanding its fiber network, providing speeds up to one gigabit per second, or about 100 times faster than current average Internet speeds. The company partially started Fiber as a way to encourage telecoms to offer faster Internet at more competitive prices -- and its paying off.

Google's Internet initiative is starting to expand into some of AT&T's territory, with the company recently announcing it will offer Google Fiber in areas of Raleigh and Durham in North Carolina, right where AT&T was planning to bring its U-Verse with GigaPower.

That's not the first time Google and AT&T have staked out the same position, either. Last year, Google brought its fiber network to Austin, and AT&T announced just a day later it would bring its GigaPower to the city as well.

While Google Fiber is still in just a handful of locations in the U.S., the ultrafast connection starts at $70 per month and is driving AT&T to expand its GigaPower fiber network into new communities and match prices with Google. 

AT&T's current position
Right now, Google doesn't seriously threaten AT&T's Internet business revenue. Google's Internet footprint is so small and only offers an ultra high-speed connection that may be too pricy for many consumers. But the fact that AT&T has to compete against Google in the Internet business should be at least a little troubling for investors. Google's taking the long-term strategy of pushing telecoms to offer faster Internet at cheaper prices, and the company isn't stopping its program anytime soon.

As for the wireless space, T-Mobile is likely having more of an effect on AT&T's business. With AT&T making so many changes to its plans and pricing strategy to match T-Mobile's, the company is clearly trying to convince customers to stay, or win them back.

While neither Google nor T-Mobile are going to take AT&T down anytime soon, both pose serious risks to the company over the long term -- and that's nothing for investors or AT&T to take lightly.

One topic AT&T, Google, and T-Mobile can all agree on
While these three tech companies may be battling each other for more dominance, there's one trend they can all agree will do wonders for their mobile businesses -- wearables technology. Though it's still in its early stages, investors are gearing up for the next iteration of mobile. To help investors tap into wearble tech's potential, The Motley Fool's offering a free report on how to get started -- just click here now.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Google-Class C Shares and Google (A shares). The Motley Fool owns shares of Google-Class C Shares and Google (A shares). 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers