After months of stability, suddenly there’s a price war breaking out for mobile phone service. But this time around, it’s just for customers who pay their bills in advance every month, for so-called prepaid service.
In the latest salvo, this week, T-Mobile (TMUS) cut the price of its unlimited data prepaid plan by $10 to $50 per month. The “limited time offer” has a few of the usual mobile plan caveats, too. Streaming video is degraded to DVD-quality, tethering a laptop or other device is limited to 3G speeds, and overall service can be slowed if a customer uses more than 50 GB in a single month.
The price cut comes as T-Mobile is trying to get regulatory approval to merge with Sprint. Some other players in the prepaid market have said the merger would reduce competition in that arena, but Sprint (S) and T-Mobile have vowed to continue offering their various, separate prepaid brands.
The move by T-Mobile, the third-largest carrier, also followed recent price cuts by its two larger rivals. By dropping its prepaid unlimited plan to $50, T-Mobile will restore the price advantage it had before AT&T and Verizon cut prices on their prepaid unlimited plans.
AT&T (T) last week announced a limited-time, $20-per-month discount for new sign ups on its two prepaid plans. Customers can get AT&T’s usual $65 plan for $45 a month, which includes downgraded video, no tethering, and potential slowdowns after a 22 GB threshold. Or, customers can opt for AT&T’s premium $85 plan for just $65 per month and get HD-quality video, 10 GB of tethering, and the 22 GB threshold for slowing.
That prompted a move from Verizon, which simply started offering a $5 per month discount on any prepaid plan that cost at least $40 per month if the customer signed up for autopay. That brought the cost of the carrier’s prepaid unlimited data plan to $65. Video streaming is downgraded, tethering is not included, and data speeds can be slowed at anytime if Verizon’s network is congested. Verizon (VZ) also upped the data allowance for its 7 GB limited data plan to 8 GB.
