Question: AT&T, the second largest U.S. wireless carrier and only operator offering the iPhone, plans to attract average consumers to sign up for data service by

AT&T, the second largest U.S. wireless carrier and only operator offering the iPhone, plans to attract average consumers to sign up for data service by cutting its prices: A $15 a month plan for 200 megabytes of data; $25 a month plan for 2 gigabytes of data. Verizon Wireless, the largest U.S. wireless operator wouldn’t comment on AT&T’s new pricing plans. But if history is any indication, it won’t take long before Verizon, operator of the HTC Incredible, a smartphone that looks very similar to an iPhone, begins offering tiered data service.
a. Describe the basis of the competition between AT&T and Verizon.
b. Is AT&T likely to be using predatory pricing?
c. If a price war develops in the market for data services, who benefits most?

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