T-Mobile is eliminating data plans for new customers -- and for current ones who opt in.
The company is getting rid of all its wireless data plans and instead offering new customers one unlimited plan, T-Mobile said Thursday. Under the new plan, called T-Mobile One, everyone will get unlimited talk, text and high-speed 4G LTE data.
The company has also changed prices for unlimited. The first line will be $70 a month, the second line will cost $50 a month and additional lines will be $20 a month for up to eight lines with auto-pay turned on. The price is $5 more a month without auto-pay. For a family of four, the new plan will cost $40 a month per person.
What's the catch? There are a few. While this plan will benefit those looking for unlimited everything, it will cost more for people who have been subscribed to the lowest data plans. The current plan starts at $50 for 2GB of data per month. This means individual customers on its new plan will pay $20 more a month. But the new price is lower than the cost of unlimited right now. Currently, T-Mobile customers who want unlimited pay $95 a month for an individual line.
The second big catch is that customers who want to use their phones as hotspots will also have to pay more if they want to share their mobile data at 4G speeds. T-Mobile said it's including unlimited "tethering" or data sharing at 128 kilobits per second. If you want access to 4G speeds, you have to pony up an additional $15 per month for 5GB of data per month.
The third big catch is that the new unlimited service plays all video at a lower quality, using a standard definition format rather than high definition. This significantly reduces the amount of data that someone who is watching a lot of video on a mobile phone would use. T-Mobile says that's how it's able to offer the new plan so affordably.
T-Mobile has already been offering this feature as part of its Binge On program, which lets customers stream video from select sites without it counting against their data package. Executives say that customers haven't noticed the difference in the quality of the video, with less than 1 percent turning off the feature to watch video in HD. But for customers who really want the HD video, T-Mobile is offering that as an option for $25 more a month. This bumps up the price of the unlimited plan to $95 a month, the same price as its current unlimited offer.
T-Mobile's move comes on the same day that Sprint announced it will also offer a lower cost unlimited data plan for customers willing to view video in standard definition. And it comes on the heels of announcements from its two biggest rivals, AT&T and Verizon, who are adding more data to their plans and raising prices. AT&T and Verizon are also offering a new feature that lets customers go over their data allotment, but then slows service. This is something T-Mobile has offered for years.
All of these shifts in pricing signal how competitive the wireless market is right now.
The new T-Mobile plan goes into effect September 6 for new customers. Current T-Mobile customers can keep their plans or switch over to the new one.