Tuesday, February 4, 2014

AT&T Ends Early Termination Fee Subsidy Program

AT&T has ended a promotion to pay T-Mobile customers up to $450 to switch services, stopping the program after less than a month, though launching a new lower-price family plan.  In addition to the price cuts on family plans,  AT&T continues to offer to give customers a $100 bill credit for every new line they add to their accounts.

The quick changes resemble the similarly-rapid changes Sprint made prior to unveiling its “Framily” group plan. Sprint had launched a more flexible device upgrade program, some would say in response to similar T-Mobile US programs.

One might argue that Sprint quickly determined frequent device upgrades were less potentially valuable as an acquisition or retention program than creating more-flexible group plans.

Similarly, one might argue AT&T grabbed headlines and attention with its program to pay user early termination fees if they switched to AT&T, but like Sprint concluded it would fare better by changing the value-price relationship for its group plans.

T-Mobile US continues to offer payment of early termination fees of up to $650 when customers switch accounts to T-Mobile US.

The pace of offers suggests we might be early in the marketing battles now erupting in the wake of a furious effort by T-Mobile US to attack and rearrange market shares in the U.S. mobile business.

Investors might rightfully worry that the process is a bit open-ended at this point, creating greater instability in the market and threatening to make industry revenue and earnings forecasts far less reliable. Share prices for U.S. mobile service providers have taken a hit recently, largely, it might be argued, over concern about what marketing campaigns might do to revenue and earnings.

Recent actions by AT&T, T-Mobile US and Sprint suggest that, at the very least, service providers are prepared to launch new offers in rapid succession, and that revenue predictability is going to be exposed.

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