Instead, T-Mobile USA will throttle data speeds back to 2G levels if the cap is reached.
The new plans include 2 Gigabytes, 5 Gigabytes or 10 Gigabytes of data starting at $50 per month. (See T-Mobile Revamps Wireless Pricing.)
T-Mobile is also making its device payment plan easier to understand and easier on the customer's wallet by charging an initial up-front payment followed by a fixed number of monthly payments. For a $550 myTouch 4G phone, for example, a customer will pay an initial $250, followed by $15 for the next 20 months. Once the 20 months are completed, the monthly device-related payments cease.
Why this matters
Tiered data pricing is more or less inevitable for the big carriers in the U.S., but T-Mobile is at least handling it in a way that's easy for consumers to understand, mitigating potential backlash.
Both AT&T and Verizon charge overages once a cap is reached, potentially overriding the positive effects of lower-priced plans. Sprint Corp. (NYSE: S) is the only carrier to maintain its unlimited plans thus far, but that could be short-lived.
T-Mobile is also working aggressively to show the industry it won't stop innovating and competing ahead of its acquisition by AT&T. If the merger is approved, AT&T has promised to let T-Mobile's existing customers keep their rate plans, which makes these new plans more valuable for those that get locked in.
Read up on the end of unlimited below.
- Verizon: Turn Tiers to Smiles
- Verizon Confirms the End of Unlimited
- Verizon Sheds a Tier for Unlimited Data
- Tablet Prep: AT&T & Verizon Shake Up Pricing
- AT&T Intros Mobile Data Caps
- Managing Mobile Data Caps
— Sarah Reedy, Senior Reporter, Light Reading Mobile