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Verizon and AT&T Ignite Price War

AT&T and Verizon Wireless today announced flat-rate subscription plans that would give customers unlimited calling time for $99 a month to anywhere in the nation.

The plans, announced first by Verizon and then matched by AT&T hours later, has ignited a pricing war that will likely pressure struggling Sprint Nextel to respond. The flat fee moves away from pricing models that offer tiered pricing for a specific number of minutes and charge extra for time spent beyond that limit.

For an additional $20, Verizon customers of the flat-rate subscription can get unlimited messaging anywhere in the U.S. For $40 more, users get unlimited messaging, video, Internet access and email from their cell phones to anywhere in the nation. Verizon said its plan will be available immediately.

Responding to Verizon's announcement, AT&T said it would offer a similar plan to wireless customers beginning Feb. 22, that will be available on all AT&T devices including the iPhone. AT&T is also offering unlimited messaging with its $99 flat-rate plan for an additional $35 a month.

Sprint, however, won't be joining the price war just yet. Spokeswoman Leigh Horner said the company is conducting trails for unlimited flat-rate subscriptions for $119 in San Francisco, Minneapolis, Philadelphia and Tampa Bay.

"We are continuously evaluating what we have in the market but we're not sharing anything at this time," Horner said.

Analysts say Sprint won't be able to stay away from the fray for long. The Overland Park, Kansas-based wireless carrier has lost more than 1 million subscribers in the last year and the announcements by Verizon and ATT seem directly aimed at taking more Sprint users, Craig Moffett, an analyst at Sanford C. Bernstein, wrote in a report.

"This $99 offer appears primarily targeted at attracting 'power users' from other carriers, in particular Sprint," Moffett said.

Separately, Sprint's senior vice president of government affairs, Robert S. Foosaner, announced he will retire from his job as the top regulatory official for the company.

According to the company, Foosaner didn't not announce immediately plans to go elsewhere. Foosaner, came to Sprint in 1992 from law firm Jones, Day, Reavis & Pogue, where he was a partner chairing the communications practice. Foosaner is also a 20-year veteran of the Federal Communications Commission, where he worked on the commission's regulation, policy, enforcement and international activities.

By Cecilia Kang  |  February 19, 2008; 3:09 PM ET  | Category:  Cecilia Kang
Previous: Goodbye, Analog Cellphone | Next: T-Mobile Enters Wireless Price War


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This come right after research reveals extremely high internet usage by ATT/iPhone users. Verizon can make an offer that will cost ATT a great deal more because Verizon users don't do as much internet.

Sounds lik a great deal for Verizon - an offer that costs their competitor wads of cash.

Posted by: jinoturistica | February 20, 2008 5:26 PM

People are willing to pay $20 for "unlimited" messaging? Wow, that must be like a meg of data maximum, depending on your thumb strength.

Posted by: Robert17 | February 21, 2008 8:23 AM

Ma Bell [the company from yesteryears] is figuratively kicking herself for not coming up with montly "minute" plans pricing scheme for land lines. How did we let cellular phone companies get away with charging us monthly minute plans. I think consumers need to start backing carriers who are willing to offer fixed monthly rentals price like land lines, cable, etc.?!

Posted by: Bruce356 | February 21, 2008 11:33 AM

considering that we have had unlimited phone incoming outgoint for 2 years from sprint nextel for 99.99 per month I dont know what advantage this is. they are the only phone carrier that has unlimited minutes that we have found. Unlimited messaging is at 15 per month in addition.
If verizon/att were to offer unlimited cell phone minutes they would be in the game!

Posted by: agstlmo | February 21, 2008 8:42 PM

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