Sometimes, a good old-fashioned price war benefits customers while also benefiting the industry by bringing in more customers.
The four major wireless carriers -- AT&T (NYSE:T), Verizon (NYSE:VZ), Sprint (NYSE:S), and T-Mobile (NASDAQ:TMUS) -- have been through this once before. Just a few years ago, text messages and voice calls were limited by quantity and minutes, respectively. That quickly changed and what was once a great source of overage revenue for the carriers became included in even the most basic plans.
At first, that seemed like bad news for AT&T, Verizon, Sprint, and T-Mobile, but it actually opened up the wireless world to more customers. Now, the same shift that happened with voice minutes and text messages is occurring with unlimited data -- led by T-Mobile and, to a lesser-extent, Sprint. Something that was once sold by the gigabyte in a metered fashion has become unlimited.
Both Sprint and T-Mobile have introduced new, cost-effective unlimited plans, with the latter making all-the-data-you-can-consumer (with some caveats) its default setting.
Which carrier has the cheapest unlimited data plans?
When it comes to unlimited data plans, two things are worth noting. First, AT&T and Verizon are not playing in this space. Both companies have grandfathered unlimited users and each one has relaxed overage rules to make it possible for customers to simply see their data slow down when they exceed their allotment rather than run up a big bill. (AT&T also currently offers DirecTV subscribers the option to buy an "unlimited data" plan, but it cannot be purchased on its own.)
Second, when it comes to a single user, none of the four major carriers is the cheapest option. The various prepaid carriers (some of which are operated by the big four) have lower prices for unlimited plans, but many consumers prefer to be billed over paying up front.
If you want unlimited data on a major carrier with a post-paid plan, that means choosing either Sprint or T-Mobile. In the case of both companies, unlimited is not entirely unlimited, since they reserve the right to throttle the heaviest users during peak network time. That won't impact the vast majority of people (T-Mobile put the number at the top 3% on its network) and it's not really a factor when picking a plan.
Both companies have similar offers, but there is a clear best choice depending on how many people are in your family.
Sprint's new Unlimited Freedom plan is marketed as being two lines for $100. That's true, but it only tells a piece of how the pricing actually works. The carrier charges $60 for the first line, $40 for the second ($100 in total), and then $30 for each additional line up to 10.
T-Mobile's ONE plan is similar, but not the same. The company charges $70 for the first line, $50 for the second ($120 in total for two), and $20 a month for each additional line. The offer requires using autopay, and it costs $5 more per line without it.
Sprint has a cheaper price for families of two or three -- $100 versus $120 and $130 versus $140, respectively -- but both providers charge $160 for four lines. If you have five to eight family members, T-Mobile offers a better deal, while Sprint offers a ninth and tenth line.
This is good for consumers
AT&T and Verizon do not want to follow T-Mobile and Sprint, but past history indicates that eventually they will. T-Mobile specifically, with its Un-carrier moves, has pushed the industry places where the two biggest providers did not want to go.
That will likely happen with unlimited as well, especially when more and more customers have become aware of the fact that AT&T and Verizon no longer have major advantages when it comes to network quality. Sprint has been pushing that in its ads featuring Verizon's former "Can you hear me now?" spokesman and slowly the public will realize that price, not network, should be how they pick their service.
Sprint has the cheapest unlimited plans for smaller families and both companies essentially charge $40 per line for a family of four, while T-Mobile becomes the cheapest unlimited data provider for bigger families. In both cases, the differences are relatively minute, and either company makes a good choice, giving people freedom from overages without worrying about exceeding data allotments.
Daniel Kline has no position in any stocks mentioned. He remains a T-Mobile customer with three lines even though Sprint would be cheaper. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. 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.