The wireless industry, with the exception of T-Mobile (NASDAQ:TMUS), has a different definition of "unlimited" from the vast majority of people.
In most cases, the word means "without limits." Sprint (NYSE:S), however, has become the latest carrier to offer a plan in which the word "unlimited" features heavily in how it sells a plan that's not, by conventional terms, actually unlimited. The new offer from the company proclaims, "Unlimited data starts at $20/mo." That's in bold, across the top of the company's Web page, touting the promotion.
The problem is that Sprint is overselling what's actually a very good deal. The $20 promotion offers 1GB of high-speed data, and then unlimited data at 2G speeds. That's sort of like offering an all-you-can-eat buffet where people can help themselves to one plate of shrimp, prime rib, and crab legs, and then offering them unlimited lettuce. It's still technically "all you can eat," but the presentation is at best misleading.
Sprint has a good deal here. It's essentially copying T-Mobile and offering consumers a way to no longer have overages, at a slightly better price. But while the company doesn't exactly hide how it's defining "unlimited," it certainly doesn't lead with that information.
The promotion also further attempts to, if not mislead, at least misdirect consumers by not mentioning off the bat that the $20 plan is for data only. To actually activate a phone, subscribers will also need a voice and text plan, which costs another $20 each month.
Sprint has a decent offer here and should have just sold it for what it is, but instead it fell into typical industry patterns and attempted to play the public for fools.
Is it better than T-Mobile?
With these new plans, Sprint has clearly matched what T-Mobile already does in offering consumers a paid-for amount of high-speed data and then as much slower data as they want to use. This approach eliminates overage charges and gives consumers billing certainty each month.
The Sprint plan compares favorably with the 1 GB option at T-Mobile. It's essentially the same thing for $10 less a month. The major caveat, though, is that T-Mobile offers unlimited music streaming, which doesn't count against an individual's cap for a number of popular music services (and there are rumors that it plans to do the same in video).
Offering the free audio streaming for even moderate music listeners enhances the value of T-Mobile's offer greatly.
|1 line comparison||Sprint||AT&T||T-Mobile||Verizon|
|Plan||Starter Unlimited||Mobile Share||Simple Choice||Verizon Plan|
|Included high-speed data||1GB||300MB||1GB||1GB|
|Monthly data cost||$20||$20||Incl.||$30|
|Included unlimited 2G data||Yes||No||Yes||No|
|Unlimited talk & text/phone access||$20||$25||Incl.||$20|
|Monthly plan price||$40||$45||$50||$50|
For customers who use limited amounts of data, Sprint gives them 1GB. AT&T comes in at $5 more per month while offering only 300 MB of data. Verizon offers 1 GB, but it charges $10 more. In the case of both rivals, Sprint's deal makes more sense, because even though 2G data is very slow, it's better to have that than to pile up huge overage charges.
The lesson here for consumers is one that Legere has been preaching for years -- don't trust wireless company advertising. Sprint isn't violating any laws here, it's just leading people to a conclusion that's not really correct. It's a strong case of if something appears too good to be true than it probably is.
Sprint has a decent deal here for low-data-use customers. It's clearly a better than AT&T or Verizon are offering, with much less risk for consumers. It's arguably as good a deal as what T-Mobile offers at a better price (albeit without the free music streaming).
What it's not is unlimited data. Sprint offers that and it costs $70 per month. Using the word "unlimited" for this plan is heavily misleading, and the company should sell the $20 offer for what it is, rather than trying to trick people into thinking it's something more.
Daniel Kline has no position in any stocks mentioned. He has 10GB a month and never comes close to using it. The Motley Fool recommends Verizon Communications. 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.