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Verizon, AT&T and T-Mobile in price war

Verizon Wireless introduced an unlimited calling plan Tuesday with no roaming or long-distance fees for $99.99 a month, an offer that appeared to spark a price war among carriers.
/ Source: The Associated Press

Verizon Wireless introduced an unlimited calling plan for $99.99 a month on Tuesday, a move that was quickly matched by AT&T Mobility and T-Mobile USA and weighed down stock prices for all U.S. mobile carriers.

Verizon Wireless was apparently the first major carrier to make an "unlimited" plan available nationwide with no domestic roaming or long-distance fees. Its announcement was all but five hours old when AT&T announced its own unlimited plan.

"This is a highly competitive market and we're committed to moving fast to meet customer needs," said Ralph de la Vega, chief executive of AT&T Mobility.

Three hours later, T-Mobile followed suit, saying it would introduce a $99.99 plan on Thursday. Unlike the Verizon Wireless and AT&T plans, T-Mobile's includes unlimited text and picture messaging, which costs $14.99 per month when added to other T-Mobile plans.

The Verizon Wireless plan is "likely to have repercussions for years to come," Sanford C. Bernstein analyst Craig Moffett wrote in a research report, before the other two carriers introduced their competing plans.

Moffett said Verizon Wireless' move was a blow to confusing pricing plans. He likened it to Sprint's introduction of a flat-rate long-distance price for landline phones in the 1990s. That made it easier to compare plans and hastened a rapid decline in prices, Moffett said.

A relatively small number of cell-phone power users are expected to benefit from the new plans, but investors saw little chance for the carriers to recoup lost revenue by up-selling customers who now pay less.

Shares of Verizon Communications Inc., which co-owns Verizon Wireless with Vodafone Group PLC of Britain, fell $2.49, almost 7 percent, to $35.34 in late afternoon trading.

AT&T Inc.'s shares fell $2.03, or 5 percent, to close at $35.85.

T-Mobile USA is a unit of Deutsche Telekom AG, whose U.S. shares fell 4 cents, or 2 percent, to $19.15.

There had been speculation that Sprint would introduce a nationwide unlimited plan. In May, it introduced one to residents of Philadelphia, Minneapolis, Tampa, Fla., and parts of Northern California and Western Nevada. Sprint's plan costs $119.99 a month, and includes unlimited Web use, e-mail and messaging.

Citigroup analyst Michael Rollins said Sprint "fumbled at the goal line" and let Verizon Wireless get ahead of it in improving customer perception. He called it a surprising move for Verizon Wireless, which has previously used its image as a quality provider to charge higher rates.

Sprint spokeswoman Emmy Anderson said the company is looking at how well the offer is doing in the trial areas, and hasn't announced any plan to take it nationwide.

Sprint's stock fell 34 cents, or 4 percent, to $9.23.

Helio LLC, a small carrier that rents time on Sprint's network, is offering a $99 monthly unlimited plan nationwide. It includes unlimited Web use, e-mail and messaging. SK Telecom Co. of South Korea owns a majority of Helio.

Verizon Wireless also introduced a $39.99-a-month plan for cellular broadband using PC plug-in cards. Compared to the existing $59.99 plan, it's capped not by download speed but by the amount of data the user can download in a month: 50 megabytes instead of 5 gigabytes.