T-Mobile Introduces Mobile Plan With No Overage Fees

T-Mobile US Inc. (TMUS) introduced a mobile-phone plan that will prevent users from exceeding their data limits and incurring extra charges.

For $40 a month, a customer can get as much as 500 megabytes of fourth-generation LTE data service, along with unlimited talk and text messages, T-Mobile said today on its website. The Simple Starter plan, which starts April 12 and doesn’t require an annual contract, won’t charge overage fees because customers won’t be able to use more than their data allotment. Instead, they will be prompted to pay more if they want additional access.

Chief Executive Officer John Legere said the plan is designed to be a “predictable, affordable solution” for new, price-sensitive customers. Wireless carriers typically charge fees when customers use more data than their plan includes. Companies have been seeking ways to cope with skyrocketing mobile data use, which pressures their networks.

“People shopping at the $40 level want to pay that amount, not get surprised with overage charges,” said Mike Sievert, chief marketing officer of Bellevue, Washington-based T-Mobile.

A customer who reaches the 500-megabyte limit and wants additional data allotments would pay $10 for an extra gigabyte, Sievert said.

Photographer: Scott Eells/Bloomberg

Pedestrians holding umbrellas walk through the rain past a T-Mobile USA Inc. retail location in New York. Close

Pedestrians holding umbrellas walk through the rain past a T-Mobile USA Inc. retail location in New York.

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Photographer: Scott Eells/Bloomberg

Pedestrians holding umbrellas walk through the rain past a T-Mobile USA Inc. retail location in New York.

‘Predatory’ Plans

Legere wrote in a blog post today that unexpected charges for data overages are wrong and that “I personally want to drive those predatory bait-and-switch schemes out of this industry.”

T-Mobile has been ratcheting up competition by introducing no-contract plans, phone financing and lower-cost international roaming rates -- all part of its “un-carrier” campaign. Legere said that today’s unveiling marks the first of three days of planned announcements by the company.

Competitors such as Verizon Communications Inc. (VZ), AT&T Inc. (T) and Sprint Corp. have been altering service plans and prices in response to T-Mobile.

To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Sarah Rabil at srabil@bloomberg.net John Lear

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