Sprint, T-Mobile: The Price War's On

T-Mobile lowering its family data pricing is forcing Sprint to respond and could spark a true price war in the US.

Sarah Thomas, Director, Women in Comms

July 30, 2014

3 Min Read
Sprint, T-Mobile: The Price War's On

Up to this point, the pricing changes the US wireless operators have been making have seemed more like rhetoric than actual savings, but now both Sprint and T-Mobile are signaling that the price war is about to get real.

First T-Mobile US Inc. lowered its family plan pricing to $100 for 4 lines and 10GB of data, a full $60 less than the competition. The deal does have its caveats -- each line is limited to 2.5GB and it's only available until the end of September -- but it's a pretty compelling offer if you can act quickly.

What T-Mobile's new offer really highlighted is how weak Sprint Corp. (NYSE: S)'s looked in comparison. Sprint's comparable Framily plan costs $160, includes only 4GB of data, doesn't allow for tethering, and charges overages. The inherent weakness of this is something Sprint CEO Dan Hesse acknowledged on the company's second quarter earnings call Tuesday morning. (See Sprint Seeds Market with LTE-A Handsets and Sprint Earns $23M in Q2.)

Hesse noted that while the plans were competitive when they launched earlier this year, the market dynamics have changed. As such, Sprint plans to experiment with lower pricing plans. The Sprint boss said these experiments will be for both unlimited and tiered plans, but stressed that customers still really want unlimited, so he'd be "very surprised" if new plans don't have an unlimited element.

"It was competitive then, but it's become less competitive at certain line levels," Hesse admitted of Sprint's Framily plans. "It's too early to have results, but we'll learn from those trials. We haven't made decisions yet, but may need to make adjustments to pricing levels based on what we learned."

On the prepaid front, Sprint's Virgin Mobile USA Inc. (NYSE: VM) brand launched a new Wal-Mart exclusive plan, Virgin Mobile Custom, that lets customers build plans around their usage -- lines start at $6.98 a month, plus $5 unlimited access to Facebook, Twitter, Pinterest, or Instagram, or all four for an extra $10 per month. The plans are changeable on the fly from customers' mobile phones and also include granular parental controls.

The new plan, like AT&T Inc. (NYSE: T)'s toll-free data plans, is already getting some flack for encouraging use of certain apps over others, but it's something Sprint more or less admitted it's exploring as well.

It's clear that operators are moving from treading lightly into pricing customization into full-fledged data plan shakeups and experiments. This should ultimately be a good thing for the carriers and potentially even their customers, especially if the price war that Sprint and T-Mobile are trying to spark does take hold.

Of course, this could all be a moot point if Sprint and T-Mobile merge, as they are hoping, but it's good to see they're keeping each other -- and their larger competitors -- on their toes in the meantime. (See Sprint, T-Mobile Settle on $32B Price and Sprint & T-Mobile: A Tale of Two Maps.)

— Sarah Reedy, Senior Editor, Light Reading

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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