The Empire Strikes Back: AT&T Hits T-Mobile With Direct $450 Incentive for Customers To Switch

Ahead of the Consumer Electronics Show this upcoming week, where T-Mobile is expected to announce an incentive to lure users on other carriers' contracts, AT&T has launched a preemptive strike targeted directly at the smaller, recently surging company.

On Friday AT&T announced, "Starting today AT&T is offering T-Mobile customers the opportunity to upgrade their mobile lifestyle with value of up to $450 per line when they switch a to AT&T and trade in an eligible smartphone."

The deal entails a promotional card for up to $250 for T-Mobile customers trading in certain smartphones, and an additional $200 credit for transferring wireless services to AT&T Next. Of course, the value of trade-in phones varies, and signing up for the traditional AT&T contract service will not qualify for the credit.

T-Mobile met with much success in 2013 after unveiling its "Uncarrier" programs, which do away with traditional smartphone subsidies and contracts, and offer month-to-month flexibility. Other standard wireless charges like roaming fees have also been eliminated by T-Mobile in subsequent changes. By August, according to The New York Times' Bits Blog, the company had added 1.1 million subscribers.

In October, as LatinosPost reported, T-Mobile CEO John Legere announced "Uncarrier 3.0," the third big change to the resurgent company's customer policy. That move eliminated international fees from T-Mobile's Simple Choice plan and introduced Shakira as the company's Latin American superstar partner.

The fourth change to T-Mobile's Uncarrier strategy has been heavily hinted by Legere on Twitter as eliminating another "customer pain point."

#ItsAboutCustomers -Time to eliminate another customer pain point? Time for #Uncarrier4? Yes it's time! Stay tuned...Happy New Year #Randall

— John Legere (@JohnLegere) December 18, 2013

Later leaks pinpointed the change, code named "Houdini," as an incentive to encourage customers of traditional wireless carriers with two-year contracts to switch to T-Mobile. Customers that want to leave their carrier are subject to heavy early termination penalties that can often cost as much, or more, than the subsidized smartphone they bought when they began or renewed their contract.

T-Mobile is expected to give new customers who are abandoning carriers like AT&T (but not only AT&T) up to $250 in credit for switching. The deal is also expected to work for up to five phone lines, meaning T-Mobile is going after the big wireless companies' wireless family share plans. T-Mobile make the announcement at the Consumer Electronics Show in the coming week.

According to the Times report, Legere responded to the direct AT&T attack by calling it a "desperate move." "I'm flattered that we have made them so uncomfortable! We used AT&T's cash to build a far superior network and added Un-carrier moves to take tons of their customers - and now they want to bribe them back!" said Legere in a statement. "Consumers won't be fooled... nothing has changed, customers will still feel the same old pain that AT&T is famous for."

Wireless companies are bracing for a big shift in strategy - one that T-Mobile has capitalized on early - as the premium smartphone market in America is widely seen as at its saturation point. This means fewer chances to sign up completely new customers, less advantage for wireless companies in subsidizing phones, and more fighting by companies over each other's current customers.