At&t raises prices on older phone plans as churn accelerates

AT&T is hitting some of its most loyal customers with price hikes on legacy unlimited phone plans, a move that comes as the company struggles with a growing exodus of subscribers.

Legacy plan holders face $5 monthly increase

Starting next month, AT&T will increase the price of select wireless plans active before July 24, 2025. Single-line legacy plans will see a $10 monthly increase, while accounts with multiple lines will face a $20 monthly increase. The company justified the adjustment by citing the need for reliable network service and quality products.

The decision underscores a broader challenge for AT&T. The carrier's fourth-quarter postpaid phone churn rate reached 0.98%, a 13 basis point increase year-over-year. While AT&T added 1.55 million net postpaid phone subscribers last year, that represents a 10% decline from the previous year's gains. This stark contrast suggests a deeper issue than simple subscriber acquisition.

A brand identity crisis?

For years, AT&T struggled to define its brand amidst the rise of competitors like T-Mobile, known for its “Un-carrier” approach and aggressive marketing, and Verizon, which cultivated a premium image with its enduring “Can you hear me now?” campaign. The carrier’s attempts to tie itself to the iPhone in the late 2000s and early 2010s, including a popular campaign starring Milana Vayntrub, ultimately failed to resonate with consumers.

The U.S. wireless market is shifting. T-Mobile is betting big on its digital transformation, while Verizon prioritizes profitability. AT&T must clearly articulate its position. The carrier needs a marketing strategy that distinguishes it in a crowded field and convinces customers to stay.

The company is attempting to mitigate some of the fallout from the price increase by offering an additional 20GB of hotspot data per month to legacy plan holders. However, this feels like a band-aid on a larger problem—a lack of compelling value proposition.

Verizon's latest promotion, offering $5 off Visible premium plans for five years, highlights the competitive pressures AT&T faces. The service is offering a significant discount to attract new customers – a move that suggests AT&T is losing ground.

AT&T's stock reacted positively to the news, rising 2.57% on Friday despite a broader market downturn. This could signal investors believe the price increases, however unpopular, are a necessary step to improve profitability. But it also underscores the agency AT&T feels it has to make these decisions.

The wireless landscape is becoming more challenging. AT&T's legacy plans are no longer the lockstep revenue generators they once were. The company’s future hinges on its ability to adapt and connect with consumers in a rapidly evolving market.