Verizon loses phone customers as price competition heats up

Verizon Wireless has largely stayed out of the pricing battle waged between AT&T and T-Mobile, but it revealed it’s suffering a casualty or two as well.

The country’s dominant carrier lost core phone customers in the first quarter of 2014. Verizon didn’t have a bad quarter by any means. It increased its customer base by 539,000 retail postpaid connections, down from its 720,000 net additions in 2013.

But all of those new connections came from customers connecting 4G tablets to Verizon’s network. Verizon signed up 634,000 net new tablet connections, increasing its total base on connected slates by 15 percent in a single quarter, to 4.3 million devices. Verizon added 866,000 new LTE smartphones to its network in Q1, and those pricier devices tend to produce higher-value customers who invest in bigger data plans.

Where are those low-end phone customers going? The obvious answer is T-Mobile, which has been hitting its competitors over the head with its Un-carrier pricing and promotional lures for the last year. But AT&T is also a likely destination.