T-Mobile USA is throwing down the gauntlet at Sprint Nextel with its new smartphone price plans.
T-Mobile is set to announce Wednesday that it plans to cut the price of its smartphone plans. Most significantly, its mid-tier plan--which includes unlimited phone calls, text messages, and data--drops by $20 to $59.99 a month. In comparison, Sprint's comparable plan--which includes unlimited data, text, and calls to other cell phones--costs $69.99 a month.
The aggressive pricing illustrates the ultra-competitive environment, particularly for two smaller national carriers. Both companies continue to struggle with adding lucrative contract customers, and have been going after each other with discounts for months. T-Mobile, meanwhile, is trying to remain relevant even as it awaits a takeover by AT&T.
"Our goal is to get the next 100 million Americans on smartphones," said John Clelland, senior vice president of marketing for T-Mobile. "We really do think it's a key that unlocks the next wave of growth."
T-Mobile's unlimited data plans, of course, come with strings. The $59.99 plan allows you to eat up 2 gigabytes of streaming music, videos, e-mails, or uploaded photos. Once past that level, customers will receive a note asking if they want to upgrade their plan. If they choose not to, their connection will be slowed down to 2G speeds, a practice called throttling.
The new plans come after Verizon Wireless made the switch to a tiered data plan model, something rival AT&T did last year. Verizon Wireless' lowest-end plan costs $30 and has its cap at 2 gigabytes.
The allotment is sufficient for most people, with 2 gigabytes affording consumers the ability to stream 70 hours of music or 17 hours of videos each month. Sprint has argued that its data plans are truly unlimited, and don't include overage charges or throttling.
Clelland said that some consumers felt that a truly unlimited plan was too expensive, since many didn't believe they consumed that much data.
"That's why we introduced the notion of tiered high speeds," he said.
For heavier data users, T-Mobile offers a $74.99 plan with an allotment of 5 gigabytes of data before throttling, which is $15 less than before. It also offers a lower-end, data-less plan for $49.99 with unlimited phone calls and text messages. That plan was previously $65. If you choose to pay for the phone through monthly installments, you can sign up for a 200-megabyte data option for $5 a month. Traditional contract customers can get the same option for $10 a month. The plans will be available on July 24.
T-Mobile's plans are available to customers who want to bring their own phone, purchase a phone and pay for it in monthly installments, or buy a subsidized handset in exchange for a contract.