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AT&T takes aim at T-Mobile with $450 cashback lure

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US mobile phone users could have a very happy 2014 after AT&T effectively declared war on T-Mobile in an effort to stop the upstart carrier from winning over its customers.

Next week at CES, T-Mobile is widely expected to announce a deal whereby the company will offer new customers some form of recompense to offset fees incurred if they break their contract with other network providers. But AT&T has evidently decided to take a leaf out of Clausewitz's book and attack first.

Beginning January 3, AT&T is offering a limited-time deal for T-Mobile customers who want to switch to the mobile behemoth's network. Defectors will get up to $250 credit when they hand in their T-Mobile phone (depending on which model it is) and get another $200 credit if they sign up with AT&T.

"This is a desperate move by AT&T on the heels of what must have been a terrible Q4 and holiday for them. I'm flattered that we have made them so uncomfortable!" said T-Mobile's pugnacious CEO John Legere, accusing AT&T of trying to "bribe" consumers.

"Consumers won't be fooled ... nothing has changed; customers will still feel the same old pain that AT&T is famous for," Legere added. "Just wait until CES to hear what pain points we are eliminating next. The competition is going to be toast!"

T-Mobile has seen stellar growth since it stopped trying to sell itself off and decided to shake up the market instead. The company was the first major US carrier to do away with two-year contracts, and started offering unlimited data and no international data-roaming charges as well last year.

As a result, T-Mobile is growing strongly. Contract-free deals (and the company's buy-out of smaller rival Metro PCS) saw T-Mobile add over two million new customers last quarter, and its financial situation looks much improved.

This clearly has the competition worried, particularly Verizon and AT&T. The two firms have a majority share of the US mobile market, but have seen their customer base eroded of late – and AT&T's new move shows just how worried the telco is.

Details of AT&T's offer are still scant. There's no word on how long the firm will offer financial inducements to T-Mobile's customers, nor on how much specific handsets will garner in terms of credit other than that "many of the latest and most popular smartphones will qualify for a value of $250."

But it now seems likely that if T-Mobile continues to take customers from its larger rivals, we'll see more price cutting and financial inducements. The US has some of the most expensive mobile services in the developed world, and a price war could be very good news for end users. ®

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