While T-Mobile (TMUS -0.19%) has not closed its merger with Sprint (S), it has gotten official approval from the Federal Communications Commission (FCC). To celebrate that, or maybe to make a point that the combined company won't harm consumers, the No. 3 carrier in the U.S. has released a new very-low-cost prepaid plan.
T-Mobile has cut the cost of its prepaid plans -- plans where customers pay their bills in advance -- from $30 per line per month to $15 per month. At that price customers get unlimited talk and text, 2GB of high-speed data, and unlimited 2G data when that allotment has been used each month. That gives T-Mobile the cheapest wireless plan with data offered by any major wireless carrier.
T-Mobile has lowered the price of its prepaid service. Image source: T-Mobile.
What is T-Mobile doing?
"When it comes to wireless service, many have been taken advantage of, left behind or completely forgotten," said T-Mobile CEO John Legere in a press release. "It's time for another wave of change and the New T-Mobile will be at the forefront of that!"
Legere has the instincts of a combat sports promoter -- he's a master at hyping himself and his company. In this case, he's talking about more than just the $15 monthly prepaid service offer. T-Mobile also plans to offer the following:
- Connecting Heroes Initiative: This will give free unlimited talk, text, and data (including 5G when available) to "every first responder at every public and non-profit state and local police, fire and EMS agency across the entire U.S."
- Project 10 Million: A program designed to "eradicate the homework gap that exists for millions of children" by giving free internet service and hotspots as well as reduced device costs to 10 million households across the U.S.
These offers are Legere responding to critics of the merger, who predicted that it would cause prices to rise. T-Mobile also committed to raising the monthly high-speed data caps offered with its $15 plan by 500MB per year for each of the next five years.
The cheap plan, it should be noted, is for prepaid service, which is generally cheaper than post-paid (where customers get a bill each month). Still, even though these plans are cheaper in general, T-Mobile has set a new low. Here's how the lowest-priced plans for the four biggest U.S. carriers compare:
| Carrier | High-speed data cap: | Cost per month: |
|---|---|---|
| AT&T | 1GB | $35 |
| Verizon | 1GB | $30 |
| Sprint (Boost) | Unlimited | $50 |
| T-Mobile | 2GB | $15 |
Source: Individual carriers advertised offerings.
It's not actually easy to compare prepaid plans, because no two companies offer exactly the same thing. Sprint, for example, offers unlimited data, but the cost for a single line is high. AT&T (T 0.18%) has a $25 per month 8GB plan, but that requires paying upfront for the full year. Verizon (VZ -0.10%) also has a number of other offers, but none that come close to matching T-Mobile's deal on price.
Third-party carriers, which lease network access from the major carriers, do have plans that come close to what T-Mobile is offering. Mint Mobile, for example, offers a $15 per month 3GB plan if you pay for a full year. It also offers you that rate for just three months if you pay $45 upfront (with renewals at $25 a month).
T-Mobile is making a point
The T-Mobile/Sprint deal still faces opposition from a number of states, who have joined together and filed a lawsuit to stop the merger. That lawsuit seeks to make the argument that going from four national wireless carriers to three will lower competition and lead to higher prices.
This move is Legere actively showing that T-Mobile does not plan to do that. Yes, it's a showy move designed to win over consumer goodwill, but all three of these offers are in line with what T-Mobile has done for years. Legere has built his business on removing pain points for consumers and breaking industry norms. It has always been silly to think he would stop doing that after the merger.
Giving free service to first responders and helping people who can't afford service fits the T-Mobile brand. Cutting the price for the people who need that cut the most does as well. This is Legere being Legere, and T-Mobile doing exactly what it has done for years -- and what it has promised it would do post-merger.
