AT&T Inc. (T Quick QuoteT - Free Report) , one of the big players in the U.S.wireless carrier market, has announced discarding its policy of charging fees to customers exceeding data caps. The carrier will instead lower the connection speed – something which has been done by its rivals for a while now.

New Plans

Additionally, AT&T has been reshuffling its data packs in order to entice customers who have high data requirements. While raising data prices per gigabyte in the smaller packs viz 1GB/2GB data packs, the carrier is lowering the price of it’s large data packages like 30GB. This should be favorable for those who utilize data for watching online videos.  

Industry Trend

AT&T and Verizon Communications Inc. (VZ Quick QuoteVZ - Free Report) communications has been under pressure from its smaller telecom rivals like T-Mobile US Inc. (TMUS Quick QuoteTMUS - Free Report) and Sprint Corp. (S Quick QuoteS - Free Report) for both customer retention and addition. The aggressive stance of the latter two has compelled the former two companies to launch accommodative plans lately.

Notably, the competition in this space is intensifying, with T-Mobile registering high subscriber growth in the recent quarters. Furthermore, with the launch of new smartphones lined up, notably the iPhone 7 from Apple Inc. (AAPL Quick QuoteAAPL - Free Report) , aggressive promotional activities are anticipated by these carriers to draw customers.

The Bottom Line

High market saturation and ever shrinking margins owing to escalating cost of promotional activities have been affecting the wireless carriers for some time now. Notably, industry players like AT&T and T-Mobile US are trying to diversify their operations geographically outside the boundaries of US, while trying to penetrate the rural parts of the country simultaneously. Conversely, due to high investments required for the implementation of the plan, as well as spending on promotional activities, we except high level of cash burn for sometime.

AT&T currently has a Zacks Rank #3 (Hold).

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