Sprint (NYSE:S) has followed T-Mobile (NASDAQ:TMUS) in lowering prices for family plans, which could force industry leaders AT&T (NYSE:T) and Verizon (NYSE:VZ) to do the same. The move comes just a few weeks after the company's long-expected merger with T-Mobile was called off, and Sprint's CEO Dane Hesse was replaced by Marcelo Claure. Sprint majority-owner, SoftBank's CEO Masayoshi Son, installed Claure, who founded phone distributor wireless distribution company Brightstar Corp., to shake things up, and as a counter to T-Mobile's outspoken CEO John Legere.
Claure wasted little time making an impact introducing a bold new price point for families, while scrapping the company's heavily advertised Framily plans. The new offering, dubbed Sprint Family Share Pack, matches T-Mobile's $100 pricing for four lines -- which is well below AT&T's and Verizon's prices for similar plans -- while offering more included data. Like T-Mobile, Sprint is also offering to pay early termination fees to customers willing to switch to its new plan.
The move gives Sprint and T-Mobile, the number three and four mobile carriers, similar strategies. It also makes it less likely that the two companies will steal customers from each other. With Legere stating that his goal is to make up the 3 million customers who separate the two rivals, Claure's actions have likely made it that T-Mobile will need to steal customers from AT&T and Verizon to do so.
How is the Sprint deal different from T-Mobile's?
T-Mobile offers families up to four lines with 10GB of included data for $100. Sprint's deal is a little more complicated.
The carrier is offering up to 10 lines for $100, with 20GB in shared data plus a limited-time bonus of 2GB per line, up to 10 lines. That means a family with four phones would share 28GB of data each month through Sprint, but only 10GB with T-Mobile. It's not entirely an apples-to-apples comparison, as T-Mobile customers get access to a number of popular streaming music services that don't count against their data cap.
Sprint makes it clear that Claure sees a combination of price and data as the driving force for consumers. Claure told Bloomberg:
We did a lot of research with customers. Data use is growing exponentially; customers are getting angry at a bill that is larger than they expected. We decided to make it easy and double whatever is in the market. This is the best offer ever in the marketplace.
While Legere's tweets can often be passed off as simple bluster, he has a point when it comes to networks. Sprint has the worst overall network quality of the four national carriers, according to a report issued Tuesday by RootMetrics. Verizon topped the chart, with AT&T close behind, while T-Mobile was declared most improved.
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Daniel Kline has no position in any stocks mentioned. He is a Sprint customer. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.