Breaking News Emails
Major wireless carriers already are offering deals that could let consumers take home Apple's newly unveiled iPhone 6 for free, marking the latest salvo in their fight to poach customers from rivals.
Verizon Communications, the nation's largest carrier, said it will give subscribers who trade in an old iPhone a free iPhone 6 in exchange for a two-year contract. Customers who trade in an iPhone 4, 4s, 5, 5c or 5s in working condition will receive a $200 gift card to pre-order the 16-gigabyte version of the newer model, Verizon said in a statement.
Sprint said it would match carriers’ buyback pricing and provide up to $300 for eligible devices, while AT&T offered a similar deal. T-Mobile said it would beat any other major carriers' trade-in rates and give customers a $50 credit as well. Even Wal-Mart said it would sell the iPhone 6 and 6 Plus for $20 less than Apple’s recommended price of $199 and $299 when purchased with a two-year Verizon, AT&T or Sprint mobile contract.
As new devices from Apple and other makers hit the market, T-Mobile has launched some of the most aggressive plans, including offering to pay up to $350 of early-termination fees to get consumers to make the switch. CEO John Legere has a track record of shaking things up, like killing off the classic two-year phone contract along with roaming fees.
Sprint, under new CEO Marcelo Claure, is looking to take a page from T-Mobile's success by offering more for less.
"They've gotten out of the 'family' plans, which were a little confusing, were not well-received in the marketplace," said Drexel Hamilton analyst Barry Sine. "Now they're a little bit clearer on message, and their pricing looks a lot more like T-Mobile. They've got promotional pricing where your rate plan goes up at the end of 2015."
Sprint is copying T-Mobile's offer to reimburse costs to switch carriers, and unveiled aggressive pricing, including a data-heavy family plan for $100. For both of those companies that may not wind up being a terribly expensive offer, since many customers forget to claim the rebate, and many are near the end of their contract.
On the upper end are AT&T and Verizon, which have more premium offerings, particularly when it comes to video, along with more premium prices.
AT&T has been offering discounts as well. Its discounted wireless pricing helped it achieve record low churn this past quarter. But it's not just a race to the bottom. At CTIA, AT&T is showing off all the work it's doing around the automated home and automated car. And with the DirecTV deal AT&T is expected to start offering that content across their platforms, to catch up with Verizon's video options.
Verizon CEO Dan Mead said in an interview with CNBC Tuesday that his customers "want quality of the network, they want consistency. They want the ability to help manage their lives through their devices. Video growth is a very important thing, as is connection with family in terms of text, data, using social media through mobile devices."
"Verizon is the premium brand with premium prices," said analyst Sine. "They're looking at premium services now on the iPhone to get more revenue and break out of the mold of just trying to sell you a cheaper rate plan and a lower subsidized headset," he said.
"Their agreement with the NFL to offer streaming NFL games on your cell phone is a good example of how Verizon is going to exploit their premium brand and grow revenue without having to duke it out in the trenches for low prices," Sine said.
AT&T does have a lower-price offering — its new "Cricket" brand — but it's staying away from any association with AT&T. "They don't advertise it as an AT&T brand," Sine says. "But Cricket can go down-market and slug it out with the low-end carriers’ very low prices, while still using the AT&T Network and using that volume to get higher margins."
And while carriers drop data prices, we're seeing higher prices elsewhere. They're phasing out phone subsidies and spreading out the full cost of devices over time. To avoid massive sticker shock — especially for Apple's new phones, which are far more expensive than Android devices — installment plans will be front-and-center, so consumers can still walk out the door of a store feeling like they just got something for free, even if they have to pay later.