AT&T is offering T-Mobile customers up to $450 per line to switch to AT&T and trade in an eligible smartphone, it announced Jan. 3. The offer is available immediately.
T-Mobile has been taunting AT&T and threatening to steal its customers since John Legere was named CEO and T-Mobile relaunched itself as the "un-carrier" about a year ago. On Jan. 1, Legere Tweeted a photo of T-Mobile's 2014 resolutions, which included "unshackle the family from those other guys" and "give AT&T a break … or not."
T-Mobile has a press event planned for Jan. 8, where it has said it will address a new major customer pain point. According to several sources, that pain point is early termination fees (ETFs) and T-Mobile is planning to offer rivals' customers—or really, AT&T's customers, since the carriers' networks operate on the same technology—up to $350 in credit when they switch to T-Mobile.
After GeekWire reported Jan. 2 that AT&T was planning to jump out ahead of T-Mobile with a similar offer, Legere Tweeted, "If this rumor is true, I guess we are making AT&T a bit nervous. Good to know!"
AT&T, in what it calls a limited-time offer, will give T-Mobile customers who trade in their current phones a promotion card for up to $250. (Values will vary based on the age and popularity of the phone.)
"T-Mobile customers can receive an additional $200 credit per line when they transfer their wireless service to AT&T and choose an AT&T Next plan, buy a device at full retail price or activate a device they currently own," AT&T added in its statement.
It also said that T-Mobile customers who switch will "benefit from a superior smartphone lineup and award-winning customer service."
T-Mobile Shaking Up the Industry
While this is the first time a tier-one carrier has made an "un-carrier" move ahead of T-Mobile, it's hardly the first time that T-Mobile has proven that, despite being the smallest of the major carriers, it has the power to shift the industry.
In 2013, T-Mobile did away with two-year contracts, separated data costs from device costs, began offering monthly device financing plans, made it possible to upgrade more often than the standard two years, did away with international data and text roaming fees, and as part of an effort to encourage consumers to pair tablets with cellular connections instead of just WiFi, began offering anyone with a tablet compatible with its network 200MB of data for free each month, for life.
All three larger rivals have responded, to varying degrees. All the carriers now offer monthly device financing and ways to upgrade more frequently, and so in these ways have somewhat also separated device and data costs.
Still, analyst Jack Narcotta, with Technology Business Research, said the changes are less T-Mobile affecting the industry than customers affecting the carriers' strategies.
"From a devices perspective, the smartphone landscape is flattening out. The latest iPhone or Galaxy doesn't bring customers to your network in the numbers they used to, and I think that's due to smartphones—save for a few unique features," Narcotta told eWEEK.
"It comes down to developing ways to grab as much land as possible. Make sure you (as a carrier) have the devices consumers want, but ultimately the devices aren't driving business anymore. It's the services," Narcotta added. "Or, as the AT&T [announcement] shows, the purported reliability or speed of said services that are the differentiator now."
Responding to the rumors Dec. 27, Jefferies analyst Mike McCormack warned that T-Mobile could be "opening a Pandora's box, leading to intensified competition from larger peers that have better scale and higher profitability."
T-Mobile didn't immediately offer comment on the AT&T announcement.