T-Mobile's premium pricing passes AT&T, Verizon

T-Mobile introduced a new premium service plan that's more expensive than those from Verizon and AT&T, at least for a single line of service. That's noteworthy considering T-Mobile historically has offered prices that are cheaper than those of its rivals.

However, T-Mobile's move isn't surprising. The company is no longer facing government restrictions on its service pricing; as a condition of T-Mobile's 2020 merger with Sprint, the operator was prevented from raising prices for three years. That restriction ended earlier this year. (Though, to be clear, T-Mobile continues to offer cheaper pricing plans.)

Moreover, analysts have widely celebrated T-Mobile's efforts to raise the prices on its service plans. After all, more expensive plans generally translate into more revenues per user, and more profits.

Finally, T-Mobile's latest pricing action follows years of marketing from the carrier boasting of its network. Those ads are designed to position T-Mobile's network as equal to or better than the networks of its rivals, thus allowing the operator to charge the same or more for its services.

To be clear, though, T-Mobile argues that its latest service plan – dubbed Go5G Next – is "packed with value" and therefore worth the extra cash. Specifically, Go5G Next allows customers to upgrade to a new phone every year rather than every two or three years. The plan arrives roughly a month before the expected release of Apple's next iPhone.

The details

In its release, T-Mobile suggested that roughly 10% of its customers consider having a new phone every year a "major priority."

For those customers, T-Mobile said its Go5G Next plan offers a range of features and goodies alongside the ability to upgrade to a new phone after they pay off at least half the price of their old phone.

And T-Mobile isn't shy about the price tag on its latest plan: "Right now, compared to premium plans from AT&T and Verizon, Go5G Next customers with three lines will pay the same price or less – and be upgrade-ready in a year instead of waiting three years with AT&T and Verizon to get their best deals." However, the operator also offers pricing details for one, two, three and four lines of service. And in those configurations, T-Mobile's pricing can be far more expensive.

For example, one line of monthly service under T-Mobile's most expensive Go5G Next plan costs $100, whereas AT&T and Verizon charge $85 or $80, respectively, for their most expensive plans.

Again, though, T-Mobile Go5G Next customers will be able to upgrade their phones more often. "New phones are expensive. If you are a T-Mobile customer and want a new phone every year and you paid off half of the balance then this is the plan for you at a $10 per month premium over" T-Mobile's Go5G Plus, analyst Roger Entner, of Recon Analytics, wrote on social media.

The context

"Based on company commentary, we believe AT&T/Verizon promo activity around upgrades for existing subs could slow, which we believe creates an opportunity for T-Mobile to further accelerate share gains," wrote the financial analysts at KeyBanc Capital Markets in a note to investors this week, just prior to the release of T-Mobile's new Go5G Next plan.

They noted that the US wireless industry collectively added just over 2 million postpaid phone net customer additions in the second quarter of 2023. Although that figure is higher than normal, it nonetheless represents the fourth quarter in a row of a cooldown in customer growth in the industry.

But for T-Mobile specifically, the company continues to gain an outsized number of new customers when compared with its rivals. In the second quarter, T-Mobile gained 760,000 new postpaid phone customers. That's far more than Verizon and AT&T gained during the period.

More importantly though, T-Mobile continues to encourage customers to sign up for its new, premium plans. The operator introduced its more expensive Go5G plans earlier this year.

"The recent Go5G plan launch is off to a strong start," wrote the financial analysts at Wells Fargo in a note to investors after the release of T-Mobile's second quarter results. They described the plans as more "accretive" – meaning, expensive. "We continue to think we could see growth in 2024 and beyond as more T-Mobile customers migrate to these higher-end plans."

Indeed, during the second quarter, T-Mobile reported that 60% of new accounts subscribed to its most expensive Go5G Plus plan.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano