Even better deals may be coming for mobile consumers in 2015
The bargains are flying fast and furious for mobile phone consumers, but they may get even better in 2015, some analysts say.
Sprint (S) and T-Mobile (TMUS) have been leading a drive to lower prices for mobile service this year, as the two smaller carriers try to grab customers away from market leaders Verizon Wireless (VZ) and AT&T (T).
T-Mobile, under CEO John Legere, has been the driving force in the industry with its “Uncarrier” strategy that started off getting rid of two-year contracts and eliminating fees. Currently, T-Mobile covers the cost of early termination fees for switchers, up to $350 per line, while offering a low priced family plan of $100 for four lines.
Sprint, led by new CEO Marcelo Claure, has countered by matching the termination fee offer and saying it would halve the bills of customers who switch from AT&T or Verizon, though the final savings will be reduced by required phone payments.
[Get the Latest Market Data and News with the Yahoo Finance App]
AT&T and Verizon haven’t been as generous, at least not yet, but both have promotional offers running that pay customers who switch from another carrier $150 outright per line.
But, except for T-Mobile, most of the great offers only apply to people switching carriers. That may change as competition intensifies next year, says longtime telecommunications analyst Craig Moffett. “We're still early days,” he says. “In a four-player market there is always another shoe to drop.”
The proliferation of deals has made it more confusing than ever for consumers to choose the best plan. The absolute lowest prices are probably Sprint’s halve-your-bill promotion for people switching from AT&T or Verizon, says independent analyst Jeff Kagan. But for most other people, T-Mobile’s deals should be most compelling, provided that the carrier’s network coverage is adequate where they live, Kagan says.
“Verizon is the highest-priced service, but that simply means they will likely cut prices as well in 2015,” he says.
Getting new subscribers
Carriers have quite a few options for further ways to lower costs for consumers. Lately, they’ve been increasing the amount of data that comes with a plan instead of decreasing the price outright. T-Mobile this week announced the eighth move under its Uncarrier strategy, allowing customers to roll over unused data to future months.
Both Verizon and AT&T warned last week that they were seeing an increase in the number of customers switching. Eventually, that could prompt some kind of loyalty discount to deter switching. Industry analyst Kagan recommends that customers call their current carrier before switching to see if any unadvertised special deals are available.
The price war was just what regulators hoped would happen when they blocked attempts by AT&T and later Sprint to buy T-Mobile. Some analysts do worry that T-Mobile and Sprint won’t be able to afford to continue offering deep discounting -- neither has anywhere close to the cash flow or financial backing of AT&T or Verizon. But the smaller carriers also might not have a choice. They need more subscribers, and price is the best weapon available.
“Neither can afford to slow the pace, and as the two big carriers respond more aggressively, the two smaller ones will just have to fight all the harder,” says Jan Dawson, chief analyst at Jackdaw Research.
And while the stocks of all four companies have performed poorly this year, the financial impact of many of the offers is muted because existing customers generally haven’t been offered the same low rates, Dawson explains. That would change if the price war spreads, of course.
T-Mobile CEO Legere, known for his outspoken and occasionally expletive-laden remarks, vowed this week that he’d keep offering T-Mobile’s discounts “until there’s not a single contract left on earth.” In an interview with Yahoo Tech’s David Pogue, Legere said he wouldn’t work with his competitors even on lobbying efforts with a common cause.
“I’m not playing that game,” he told Pogue. “It’s not personal. It’s just I detest the industry they set up.”
More From Yahoo Finance
Blodget: If You Own An iPhone, You're Partially Responsible For Those Kids Working In Tin Mines
