Due to fierce competition from T-Mobile, AT&T has just announced that it is cutting prices on its wireless plans for the second time this year. T-Mobile has changed the wireless game in the United States by moving away from contracts, which have been a long time staple in the wireless market dominated by companies like Sprint, AT&T and Verizon.

AT&T announced that the price cut will be effective starting on Sunday and will lower the monthly cost of plans offering unlimited calls and texts on one smartphone by $15 or 19 percent. The cut only applies to plans offering up to two gigabytes of internet data use and to get the break, subscribers have to either use a phone they already own or pay full price in order to buy a new one.

The new price cut means that customers can get one line with two gigabytes of data for $65 a month instead of $80 or two lines with the same data for $90 a month instead of $105. AT&T also offers a $100 credit to new or existing users who add a new line.

In comparison, Verizon sells a line with two gigabytes of data for $80 a month provided that subscribers buy their phones at full price through the carrier. T-Mobile currently sells a line with three gigabytes of data for $60 a month provided that subscribers to bring their old phone or buy one new. Although T-Mobile has an unlimited data plan, AT&T does not offer such a plan, figuring that smartphone users typically do not consume more than two gigabytes of data in one month.

T-Mobile sales dropped in recent years, forcing it to innovate in the competitive sphere by doing away with contracts altogether, a move which has been attractive to some consumers. AT&T and Verizon have responded by also moving away from contracts and by lowering prices on some plans. Most recently, AT&T sharply cut the cost of plans where families share data.

Subsidizing the cost of new smartphones requires locking customers into two-year contracts that make up for the up-front expense of phones. Shifting away from contracts, on the other hand, saves carriers from providing cheaper phones, instead shifting that cost onto the consumer.