T-Mobile Shuns Overage Charges

T-Mobile US Inc. stuck it to AT&T Inc. (NYSE: T) and Verizon Wireless Wednesday by introducing new mobile data pricing tiers for all its devices that don't include overage charges for those customers who exceed their monthly data limits, giving the operator a differentiator in the increasingly competitive mobile data services market.

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.

For more
Read up on the end of unlimited below.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

paolo.franzoi 12/5/2012 | 4:58:31 PM
re: T-Mobile Shuns Overage Charges

Any idea if they would allow a consumer to buy a short term upgrade of High Speed Data?  I can imagine cases for folks who were "near the line" where they might want to pay for more high speed bandwidth that month.


sarahthomas1011 12/5/2012 | 4:58:31 PM
re: T-Mobile Shuns Overage Charges

Another smart move by T-Mobile is that it's letting customers bring their own phone and use the plan, so they won't have to subsidize the cost of the device. It makes the device purchase really easy for consumers - pay outright, pay it off over time or bring your own - and it should save T-Mo some cash.

Jeff Baumgartner 12/5/2012 | 4:58:31 PM
re: T-Mobile Shuns Overage Charges

Any sense yet on exactly how short-lived Sprint's unlimited plan will be? It's one of the few reasons I signed up with them after dealing with AT&T for years. If they do go with a overage charges, I hope they grandfather everyone (i.e. me) in who has already signed up for their unlimited plan. JB

sarahthomas1011 12/5/2012 | 4:58:30 PM
re: T-Mobile Shuns Overage Charges

That would be a good idea. You can't get a short-term upgrade, but you'll get a text after you exceed your monthly limit. You can then decide if you want to move up to the next tier for then on out.

sarahthomas1011 12/5/2012 | 4:58:29 PM
re: T-Mobile Shuns Overage Charges

My guess is that it'll be around when they move to LTE and that you will be grandfathered in, but those are both just guesses. They're sticking to the unlimited shtick for now.

WilliamofOccam 12/5/2012 | 4:58:27 PM
re: T-Mobile Shuns Overage Charges

I wonder what T-Mobile means by 2G data rates. If I recall with GPRS/EDGE you can go from 9.6 Kbps to around 100 Kbps.

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