AT&T takes on T-Mobile with new contract-free plan pricing

AT&T(s t) on Thursday made two new announcements regarding service plans that put the company in closer competition with contract-free rival T-Mobile(s tmus). The company announced new Mobile Share Value plans that go into effect on December 8, as well as changes to its Next plans. Together, these changes have the potential to save customers a lot of money.

The biggest change is that the new Mobile Share Value plans give customers the option to go contract-free. And by going contract-free, customers can save $15 per month when they “Get a new smartphone for no down payment with AT&T Next; bring their own smartphone; purchase a smartphone at full retail price; or when their smartphone is no longer under contract and they switch to the new plans.” Basically, AT&T is finally giving contract-free customers a price break for not carrying a subsidized phone.


AT&T has also standardized the fee for each smartphone attached to a Mobile Share plan to $40 (today connection fee are on a sliding scale from $30 to $50 depending on which data plan you chose). So if you choose an off-contract plan and bring your own phone (or any of the other options above) you’ll only have to pay $25 per line. As with its regular Mobile Share plans, the new Value plans included unlimited voice and SMS, so the only difference between the old formats and the new Share plans launching on Dec. 8 is the amount you pay for those services.

If you’re on one of AT&T’s low-volume data plans those savings could even be significant if you remain on a contract plan. A 300 MB plan costs $60 instead of $70 a month. If you go off-contract or sign up for Next, the same 300 MB plan becomes $45 a month.

Not everyone benefits, though. If you’re a contract customer that happens to be a big data user or have a lot of devices sharing the same data plan, you wind up paying more under AT&T’s new plans. If you have a 10 GB plan will pay $10 more each month for each contract phone than you would have under the old Mobile Share format since AT&T has eliminated its bulk data discount. If you’re a big data user that opts for an off-contract Value plans you’ll definitely save money over the old plans — just not as much as small-batch data users. For a 10 GB user it works out to be about $5 per device, but if you’re got a bunch of devices on the same plan that savings could still be significant.

Like all of the new wave of mobile plans, AT&T’s new Mobile Share Value plans are confusing and complex, but ultimately its a step in the right direction. AT&T is essentially eliminating a portion of the subsidy fee ingrained in all of its plans for customers willing to pay the full cost of their devices, either up front, over time or through its upgrade program. Under its old plan structure, AT&T was essentially charging you twice if you opted to buy your smartphone outright — once in the initial device sale and again in your plan fees.

T-Mobile(s tmus) eliminated those subsidy fees from its plans when it decided to make all of its plans no-contract, which also allowed it to cut prices significantly, especially for individual customers who didn’t want big family plans. It’s no coincidence that AT&T’s new plan format favors those exact same customers.

Here’s a quick look at how the plans stack up. Keep in mind that AT&T charges $25 per contract-free device across the board, while T-Mobile charges $50 for the first phone, $30 for the next and $10 after that. Data prices go down on T-Mobile as you add more phones as well. So three lines that share on 4 GB on AT&T per month would work out to $145. Three lines that get 2.5 GB apiece on T-Mobile would cost $120.

ATT TMobile plans