AT&T (NYSE:T) doesn't want to be undone by the nation's so-called Un-carrier, T-Mobile (NASDAQ:TMUS). Last week, AT&T changed the pricing and data allotments for all of its Mobile Share Value plans -- in what was probably an effort to combat T-Mobile's rise in the wireless ranks.
T-Mobile recently became the nation's third-largest carrier by subscriber numbers, planting it firmly behind AT&T's No. 2 spot. And with the Un-carrier quickly gaining massive amounts of new subscribers each quarter, AT&T knows it needs to become more competitive.
What AT&T changed
For the most part, AT&T is either giving users more data for the same price or lowering the monthly cost significantly and shaving off a bit of data. For example, users on the previous $100-per-month 10 GB plan will now get 15 GB of data for the same price. And users who were previously on a $70-per-month 6 GB plan can now pay just $50 per month for 5 GB. The carrier is also combing its previous 1 GB and 3 GB plans into just one 2 GB plan.
Overall, the changes appear to benefit customers, especially if they aren't quite using up all of their data and are able to switch to a new plan with a bit less data for a much cheaper price (such as the 5 GB for $50). As usual, AT&T still charges for monthly access fees per line, so customers shouldn't expect to get away from that.
Another big change comes to the top-tier plans, which now receive unlimited calling and texting to Canada and Mexico for free. That's great news for existing customers, but it probably won't persuade too many other users to upgrade, considering the plans cost $100 and $140 per month, plus the monthly access fee.
Why all the changes?
With T-Mobile recently surpassing Sprint in total subscribers, AT&T can't ignore T-Mobile's mobile expansion any longer.
For the past nine consecutive quarters, T-Mobile's added at least 1 million net subscribers in each quarter, and in the most recent quarter its added 2.1 million. Part of T-Mobile's allure is its free perks -- such as music streaming that doesn't count against data allotments -- but also its straightforward plans and lower prices.
And it's those cheaper plans that worry AT&T. According to Consumer Intelligence Research Partners, when AT&T subscribers leave the carrier, they typically do so because they believe they're paying too much for their plans. So to keep users from jumping over to T-Mobile's lower prices -- and to appeal to new customers -- AT&T simply reworked its pricing.
Lastly, adding unlimited talking and texting to Canada and Mexico is a direct move against T-Mobile's recent launch of its Mobile Without Borders campaign, which allows customers to use their smartphone plans (data included) in those two counties just as if they were in the United States. T-Mobile's plan is still a better deal because it's offered to even its lowest-tier customers.
Should AT&T really be worried?
AT&T isn't in any real danger of having T-Mobile take its place just yet, and making these wireless plan changes should ensure that T-Mobile stays in the No. 3 spot for a long time. Right now the un-carrier has 58.9 million wireless subscribers, while AT&T holds a comfortable lead over T-Mobile with just under 124 million wireless customers.
While T-Mobile is making huge subscriber gains and has the fastest network, AT&T still has an overall superior network, according to a J.D. Power wireless-quality study. T-Mobile will have to make significant network upgrades to catch up with AT&T, and considering that the Un-carrier isn't spending half as much this year as AT&T is in improvements, AT&T should continue to maintain its lead against T-Mobile for quite a while.
Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.