AT&T, T-Mobile shift tactics as smartphones saturate markets
Getting your hands on that new iPhone may soon cost you more upfront, as carriers shift their tactics from customer acquisition to holding onto the users they have. Don’t worry, though—competition is still alive and well, with one cellular provider even offering a special deal for the holidays.
First, the not-so-good news: Speaking at an investor conference in New York on Tuesday, AT&T CEO Randall Stephenson acknowledged that smartphone penetration in the U.S. has—by some reports—passed 75 percent, and could be well on its way to 90 percent. According to a CNET report, the telecom giant takes this as a sign that its marketing activities must shift from attracting new customers to getting them to use their phones more, thus increasing the amount of revenues they generate for their carrier of choice.
A byproduct of this new position, according to Randall, is that carriers must lower their subsidies on handsets, thus making users pay more out of pocket whenever they wish to buy a new phone. Presumably, this would make it harder for customers to jump between carriers, thus lowering the amount of churn and increasing loyalty.
The executive admitted that this shift in strategy won’t be easy and is likely to take some time. In the meantime, the company kickstarted things on December 5th, when it introduced a new plan that gives customers a $15 discount on their monthly bill when they purchase a device outright, for full price, instead of buying it with a carrier subsidy.
T-Mobile eliminates downpayments for the holidays
In an unrelated (but more customer-friendly) move, AT&T competitor—and one-time acquisition target—T-Mobile announced on Tuesday that it would eliminate down payments on certain iPhone and iPad models for the holidays.
Earlier this year, the company adopted an “uncarrier” model, foregoing handset subsidies altogether in favour of offering customers to purchase their handsets outright through a financing program—not unlike what AT&T has signalled it wants to do in the future.
The promotion, which starts on December 11, will give users the options of purchasing several Apple devices with zero money down and monthly payments that vary between $18 and $27. These include 16GB models of the iPhone 5s and 5c, as well as similarly-sized versions of the iPad Air, iPad mini, and iPad mini with Retina display.
The moves by both AT&T and T-Mobile demonstrate that the wireless industry is in flux right now, with carriers all trying to find their own ways of differentiating them from the competition. Expect further experiments from them in the months to come, as that smartphone adoption rate continues on its upward trend.