T-Mobile and Sprint have been attracting more new customers since they introduced cheaper unlimited data plans last summer. Now Sprint is going even cheaper.
The move was made to combat Verizon, which this month introduced a new 5 GB plan at $55 per month, just below Sprint’s $60 starting price for its unlimited plan. Verizon accompanied the plan with TV commercials criticizing the more expensive unlimited plans as “unnecessary.”
So on Friday, Sprint dropped the price of its unlimited plan to $50—at least for a limited time—as a promotional offer.
“Is Verizon living in an alternative reality,” Roger Solé, Sprint’s top marketing officer, asked in a blog post announcing the price cut. “I’m scratching my head after seeing Verizon’s new ads claiming consumers don’t need–or want–unlimited wireless plans? And they say their new 5GB plan is the plan we’ve all ‘been waiting for.’ All of us at Sprint couldn’t disagree more.”
Customers who sign up for the new Sprint $50 price get it until the end of March 2018, when the monthly charge will rise to the old $60 level. And the “unlimited” data plan includes the same small print limits as the plan introduced last summer. Sprint will automatically degrade the quality of video and music streaming, and a customer’s download speed can be dramatically slowed if they use more than 23 GB of data in a single month.
The move follows T-Mobile’s decision earlier this month effectively to cut the price of its unlimited offering by eliminating surcharges and taxes as additional fees on customers’ bills.
For most of last year, Verizon wasn’t able to offer a compelling alternative to the smaller carriers’ unlimited plans. On Tuesday, reporting fourth quarter results, Verizon conceded that it would see no growth in wireless service revenue this year due to the increasingly fierce price wars roiling the market.
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Feeling heat from the competitors that had eliminated data overage charges, Verizon last year introduced its own set of plans without the hated fees and saw more customers than expected switch. That’s a win for consumers, though Verizon shareholders were less than pleased to hear the news–the stock lost 6% this week.
Sprint (S) and T-Mobile (TMUS) still have far fewer customers than Verizon and somewhat less broad wireless coverage, though they are closing that gap. But they have considerably more spare capacity on the airwaves of their networks than Verizon, which analysts consider spectrum-constrained. That makes it tough for Verizon to offer an unlimited data plan, which would encourage greater usage and lead to further congestion of its airwaves. Even AT&T (T) has offered a more expensive unlimited plan to its DirecTV customers and now has 8 million signed up.
This week, new CFO Matt Ellis repeated the company line that Verizon (VZ) sees no need to offer an unlimited plan. “That’s not something we feel we need to do,” Ellis said.