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Within 24 hours of AT&T announcing that it is dropping data overage fees for its customers, T-Mobile said it will get rid of data-based mobile service plans, giving its customers access to unlimited data on their smartphones.
Under AT&T’s plan, once customers reach their existing data limits, instead of overage charges, they will receive lower 128k-bps speeds, which will slow their Web use but allow them to continue to use some services.
But under T-Mobile’s latest Un-Carrier 12 move, which it is calling its T-Mobile One unlimited data plan, customers will get unlimited data for $70 a month for the first line, $50 for the second line and $20 for each additional line, up to eight lines, using automatic payments. T-Mobile One will be available starting Sept. 6.
There are, however, some caveats to the deal. The included unlimited video viewing is at typical DVD quality (480p), rather than in HD quality, and device tethering is not included but is available at extra cost each month. Customers who want HD video quality will pay an extra $25 a month, while LTE tethering is available for $15 a month.
What T-Mobile’s latest wireless move will mean for consumers will shake out in the near future, mobile industry analysts said.
“Clearly, they see the ‘unlimited’ message resonating with consumers more strongly than claims about network speeds and coverage,” Bill Menezes, an analyst with Gartner said in an email reply to an eWEEK inquiry. At the same time, though, with “all the caveats on the plan, I doubt AT&T and Verizon will feel much pressure to offer standard unlimited data plans” of their own since most of their customers stay within their fixed data plans.
“T-Mobile continues to hedge its network performance bets by only including lower-resolution video in the ‘unlimited’ proposition,” wrote Menezes. “You have to buy up to a higher data rate to watch HD video, which most customers probably won’t do. Tethering also has an added surcharge, which is a disincentive for customers to consume the huge amounts of mobile data they could use by tethering several devices to a T-Mobile phone for gaming [and more].”
Dan Olds, principal analyst at Gabriel Consulting Group, called the T-Mobile move “a huge shot across the bow of the other wireless carriers,” which by removing limits on data, “is directly attacking a big profit center for many carriers.”
Many wireless customers today buy larger data plans than they need each month just to protect themselves from potential overages, he wrote. “With this new all-in unlimited plan, T-Mobile takes away that fear by levying a single charge for unlimited data. This is going to put a lot of competitive pressure on the other carriers to match the plan, or else risk losing some of their most profitable customers—those who have signed up for big data plans. This is going to roil the wireless industry for sure.”
Another analyst, Charles King of Pund-IT, said T-Mobile’s move is “definitely making headlines, and is somewhat indicative of the increasing commoditization of wireless data services,” but noted that the fine print about the extra-cost video speeds and tethering options “could make the new services less popular than T-Mobile hopes.”
At the same time, he told eWEEK, “it definitely gives other carriers something to think about. If T-Mobile appears to be getting traction, as it did with ending two-year contracts, you can bet other vendors will try to follow suit.”
As T-Mobile Moves to Unlimited Data, Questions Remain: Analysts
Rob Enderle, principal of Enderle Group, said the new T-Mobile unlimited data plans could leave many customers of other carriers looking at the company’s offer, but there’s a downside, too. “With cable and DSL all-you-can-eat programs, networks have a tendency to saturate and often a small number of heavy users can bring the entire network to its knees. Wireless networks tend to be far more fragile, and I expect an unintended consequence of this could be excessive use by a few bad players and lower overall performance with T-Mobile unless they employ throttling, which folks don’t like either.”
So until the actual performance of a large number of unlimited users on the T-Mobile network is seen over time, it may be worth waiting before leaving an existing carrier, he wrote. “This is not to say it couldn’t be handled well,” wrote Enderle. “If just the excessive users are throttled and network performance for the majority remains good then, I expect most of us will be OK with this, but I’d wait and see before jumping ship.”
Overall, “T-Mobile remains one of the most disruptive firms I’ve ever seen and, for the most part, from the standpoint of the consumer, that has been a very good thing,” he wrote. “So it is a bold move and a publicity move, but until we know more about the outcome, we can’t be sure even T-Mobile can sustain this, let alone anyone else.”
The company’s Un-carrier initiatives, which it has been unveiling for several years, are designed to show customers that T-Mobile is not a stodgy mobile carrier, which is how the company identifies its key competitors, AT&T, Sprint and Verizon. In June, T-Mobile rolled out its Stock Up Un-Carrier 11 move, which offers a free full share of the carrier’s common stock to all existing and new customers to thank them for their business, as well as the potential to earn up to 100 free stock shares a year by recommending the company to friends and family members.
T-Mobile’s previous Un-carrier events have brought unlimited video streaming, unlimited music streaming, rebates to switch carriers, roll-over monthly data and more for the company’s customers. In November 2015, T-Mobile unveiled its then-new Binge-On free unlimited video streaming to all customers who had at least a 3GB monthly data plan.