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AT&T aims at T-Mobile with credits for switch in carrier

It has become clear that AT&T views T-Mobile US, a smaller carrier, as a threat.

AT&T made an announcement Jan. 3 aimed squarely at T-Mobile customers: If they switch to AT&T from T-Mobile, they can receive up to $450 in credit to spend on devices or services.

To receive up to $250 in credit, T-Mobile customers will have to trade in their smartphone. The trade-in value will depend on the type of phone and its condition.

Then, T-Mobile customers can get $200 more credit after selecting either an AT&T plan called Next, which gives customers a chance to upgrade to a new phone after one year, or its Mobile Share Value plan, its contract-free plan. (Customers don’t get the credit if they sign up for a traditional, two-year contract.)

The move is a pre-emptive strike. Bellevue-based T-Mobile is widely expected to announce at the International Consumer Electronics Show in Las Vegas this week that it will cover the costs of customers’ termination fees when they switch over to T-Mobile.

In 2013, T-Mobile shook up the U.S. wireless industry with what it calls the “Un-carrier” campaign. Its general strategy is to lure customers away from competitors by addressing the things that make people angry about their carrier. For instance, T-Mobile moved away from traditional two-year contracts for phone plans, and later the company made it cheaper to take a smartphone abroad by eliminating roaming fees.

T-Mobile has been quickly rebounding. In August, T-Mobile said it had added 1.1 million subscribers. The upswing was its largest customer growth in four years.

It is unclear whether T-Mobile is drawing many subscribers away from AT&T. But several of AT&T’s moves appear to be reactions to T-Mobile. After T-Mobile moved away from traditional contracts, AT&T, too, offered contract-free plans. And after T-Mobile gave customers a quicker path to upgrade to a new smartphone, AT&T, too, announced a similar offering a week later.

It is hard to tell whether AT&T is suffering as a result of T-Mobile’s offerings. AT&T’s churn, the rate at which subscribers leave, has been steady for several quarters. But Jan Dawson, an independent telecom analyst, noted that AT&T has been adding far fewer new customers than Verizon Wireless over the past three quarters.

 
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