T-Mobile, Sprint Escalate Price War With New Unlimited Plansby
Companies pitch $160-a-month plans for families of four
AT&T, Verizon could face challenges on unlimited: analyst
T-Mobile US Inc. and Sprint Corp. are revamping their rate plans to appeal to consumers who want unlimited streaming and web surfing, as the industry’s battle for wireless subscribers enters a new phase.
Under a plan called “T-Mobile One,” a family of four can get unlimited data for $160 a month. Currently, that rate would only get the family 10 gigabytes for each of the four phone lines -- still plenty of data for many users. And T-Mobile says its most popular plan is for 6 gigabytes per phone -- which costs $120 a month. Existing plans will still be offered and then slowly phased out starting Sept. 6, according to Chief Executive Officer John Legere.
A family of four can also now get an unlimited data plan from Sprint for the same price -- $60 a month for one line, $40 for a second, and $30 for each additional line. For the same type of plan, Sprint customers previously paid $180 a month.
The new pricing, announced separately by the companies Thursday, underscore an industrywide push to sign on heavy-spending -- and heavy-using -- data customers to monthly service plans as the U.S. wireless market matures.
The new competition for unlimited data plans is a threat to Verizon Communications Inc. and AT&T Inc.’s sales growth since both carriers rely on upgrading customers to higher-priced plans, said Walt Piecyk, an analyst with BTIG LLC. It’s “going to be hard for them to respond to unlimited offers without straining their networks,” he said. T-Mobile and Sprint, with smaller customer bases, are betting their networks can handle the surge in traffic.
‘Take a Number’
T-Mobile surpassed Sprint Corp. as the third-largest U.S. wireless carrier last year by reducing rates for family plans, removing extra charges for exceeding data plans and offering rolling credit for unused data and popular promotions like free streaming of music and video.
Sprint parent SoftBank Group Corp. is said to maintain interest in merging the carrier with T-Mobile. SoftBank, which owns more than 80 percent of Sprint after acquiring the majority stake in 2013, considered buying T-Mobile in 2014, before abandoning the effort when officials at the U.S. Federal Communications Commission and Justice Department signaled they were against a theoretical merger.
Legere said that he’s not surprised SoftBank is still interested in T-Mobile. The Japanese company needs to “take a number” because there are a lot of companies interested, he said in an interview on Bloomberg Television Thursday.
Since March 2013, when Legere unveiled the first “Un-Carrier" promotion -- eliminating annual contracts -- T-Mobile has added almost 13 million monthly subscribers. That growth has helped the stock more than double in value. During that same period, AT&T has added 6 million and Verizon added 13.5 million. Sprint has gained just 320,000.
Shares of T-Mobile and Sprint each rose following the news Thursday. T-Mobile climbed as much as 1.4 percent while Sprint gained 1.5 percent. Verizon fell as much as 1.2 percent and AT&T dropped as much as 1.8 percent.