T-Mobile has gained a reputation for trying to shake up the wireless industry by adopting unconventional business tactics — like paying for your early termination fees and offering free international roaming.
Now, it's taking aim at another longstanding industry practice: The data cap.
T-Mobile said Thursday it's replacing its entire lineup of phone plans with just a single plan that eliminates the monthly limit on how much data you can use before incurring a penalty. While current customers can stay on their plans if they like, chief executive John Legere said the new rate plans, which become available Sept. 6, will eventually become the primary way consumers interact with T-Mobile.
"The concept of data buckets being irrelevant is a big one that will grow and grow," said chief executive John Legere. "It now shifts the whole mindset."
Even as T-Mobile was rolling out its announcement, Sprint fired back with a new unlimited offering of its own:
(T-Mobile's new plan is actually called T-Mobile One, not Simple Choice as Sprint's chart shows.)
The twin decisions from both companies mark a departure from what has historically governed the industry. Data caps and metered phone plans have largely been viewed as more lucrative for carriers than unlimited data plans, analysts say. That's because, as consumers increasingly upgrade their Internet experience to include streaming video and music, they also end up buying more data than they actually need, resulting in extra profits for telecom carriers, T-Mobile executives said.
"The carriers like it that way. They like it that way, because people buy way too much data in order to avoid overage fees," said chief operating officer Mike Sievert.
T-Mobile's new plan gives new customers (as well as any existing customers who wish to switch) the following rates:
A single line is a little steep at $70 a month. But T-Mobile claimed Thursday that most of its business lies in family plans that are more economical for consumers, and that the unlimited nature of the data plan makes the price worthwhile.
Here's the fine print, though: T-Mobile's heaviest data users may still be subject to some restrictions. If you're in the top 3 percent of data hogs — who tend to use more than 26 GB of data in a month, T-Mobile said, based on current usage patterns — your data traffic may be slowed to give other users a chance.
T-Mobile, the nation's third-largest wireless carrier, has seen an explosion in the amount of video being consumed on its network in the past year after it rolled out Binge On, a program that allows customers to watch unlimited streaming video in exchange for a downgrade in video quality.
"The fact that it's at 480p actually gives back to the network," said Neville Ray, T-Mobile's chief technology officer, arguing the program has allowed T-Mobile to reclaim network capacity that can be used to support the unlimited data plans.
For capped consumers, most carriers will charge you hefty fees or slow down your mobile data if you blow past your limit. AT&T, for example, announced Wednesday that it's shifting away from overage fees in favor of throttling, the better to help ease the financial anxiety of going over.
But T-Mobile now appears to be taking that a step further.