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CR analysis: T-Mobile is cheaper than AT&T

Consumer Reports News: April 08, 2011 03:50 PM

A new Consumer Reports analysis shows that T-Mobile wireless plans typically cost $15 to $50 less per month than comparable plans from AT&T, the wireless giant that’s seeking to swallow the smaller carrier.

The finding supports anecdotal observations that T-Mobile is generally a lower-priced carrier than AT&T. It also validates concerns that T-Mobile subscribers who eventually migrated to AT&T plans would likely pay more for service than they would have under a T-Mobile plan—and that T-Mobile’s departure from the wireless market would eliminate a relatively low-cost carrier as an option for new customers.

Here are examples of AT&T’s price disparities with T-Mobile:

T-Mobile charges $50 per month for its basic 1,000-minute individual Even More Talk two-year contract plan, while AT&T charges $60 per month for its nearest equivalent Nation contract plan, which includes only 900 minutes. If we adjust for the difference in voice minutes, AT&T costs $16.67 more per month or $200 more per year for a comparable monthly allocation of minutes.

The more you buy, the bigger the price disparity. T-Mobile’s two-line, 3,000-minute Even More Talk + Text (unlimited messaging) + 200MB data two-year contract plan for smart phones costs $140 per month. The closest AT&T FamilyTalk Nation plan costs $170 per month, after you add data and messaging to the base price, but delivers only 2,100 voice minutes.

Adjusted for the 900-voice-minute shortchange, this AT&T plan costs $50 more per month or $600 more per year.

Given the opportunity to comment, an AT&T spokesman said that AT&T customers get more for that extra money. He pointed out—accurately—that on AT&T, minutes not used during one month can be used in the subsequent 12 months; subscribers can also place unlimited mobile-to-mobile voice calls free to any network when they add unlimited messaging to their individual or family plan, for $20 or $30 a month, respectively.

On the other hand, it’s worth noting that AT&T customers get less in some ways. A family can kick up the above T-Mobile plan to include unlimited data for a total cost of $150 per month. But the closest plan from AT&T is one with a cap on data downloads (of 2GB per month) and a higher cost ($190 per month, plus $10 per additional gigabyte of data if you exceed the 2GB limit). AT&T, need we remind you, is the carrier that pioneered data caps back in June, 2010.

AT&T CEO Randall Stephenson has pointed out (without explicitly confirming that the practice would apply to this merger) that in the past, such deals have included the grandfathering of service arrangements from the previous carrier. “We have a history, when we acquire one of these companies, we map their rate plans into AT&T. So if somebody chooses to stay on that rate plan, those rate plans are available,” USA Today quoted Stephenson as saying.

But the CEO’s use of the word “plan” here may be noteworthy, in that any grandfathering will almost certainly be limited to the specific plan you have when the merger takes effect. And, under T-Mobile’s current pricing scheme, what constitutes a significant change to that plan would include altering any of these major items:

  • The number of included voice minutes;

  • Whether the plan is a Talk; Talk + Text; Talk + Text + 200MB data; or Talk + Text + Unlimited data;

  • The plan type—family or individual;

  • Whether the plan is a contract plan or a no-contract “prepaid” one.

If your cell-service needs change in any significant way after a merger, you’ll have to switch to a new plan—an AT&T one, very likely. (An AT&T spokesman would neither confirm nor deny our analysis.)

So, we reckon, if you get married after the AT&T takeover and need a family plan without changing carriers, that won’t be just a tweak to your individual plan: You’ll be shopping for an AT&T family plan. Need to increase or decrease your minutes or trade up from a standard phone to a smart phone with required data service? Welcome to AT&T.

In other words, if you make any significant change to your T-Mobile plan, you’ll be forced to “Rethink possible,” as AT&T's current marketing slogan presciently warns shoppers, and you’ll likely lose access to today’s relative thrifty T-Mobile plans.

And cost isn’t the only potential disparity between the carriers. Based on our survey findings, it’s quite likely you’ll be less satisfied with that new and pricier AT&T plan than with your service from T-Mobile. After all, the bigger carrier has been meaningfully less pleasing to customers than T-Mobile, according to our recent reader-satisfaction data.

Jeff Blyskal

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