T-Mobile Shuns Overage Charges

T-Mobile one-ups its larger rivals with new tiered pricing plans that avoid any extra charges for data customers that exceed their limits

Sarah Thomas, Director, Women in Comms

July 20, 2011

2 Min Read
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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.

  • 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

About the Author

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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