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T-Mobile rips up contract on unlimited data plan

In another example of its push into prepaid, the carrier is offering its unlimited plan without a contract.

T-Mobile USA

LAS VEGAS--Take that, Sprint.

With T-Mobile USA and Sprint Nextel jockeying for customers with their respective unlimited data plans, T-Mobile today upped the ante by offering its plan without a contract.

For $70 a month, T-Mobile customers can get unlimited data, text messages, and phone calls.

The no-contract option represents T-Mobile's desire to further expand into the prepaid business -- a move that will be accelerated by its pending merger with regional prepaid carrier MetroPCS. The company has been aggressive as it works to re-spark customer growth.

In August, T-Mobile opted to follow Sprint's lead and offer an unlimited data plan without any strings. Under its other plans, customers who exceed a certain threshold will be "throttled," or see their connections dramatically slowed down.

Since then, the company said it has seen strong adoption of the unlimited plan, with 46 percent of new customers opting for it in December alone.

Sprint and T-Mobile dangle unlimited in hopes of luring away heavy data users from Verizon Wireless and AT&T, which both cap their data plans, citing the need to protect the network from being overwhelmed.

The big carriers, meanwhile, are also hoping to capitalize on consumers increasingly looking at no-contract options, and Sprint and T-Mobile each have been particularly aggressive.

T-Mobile, in particular, has embraced no-contract for its core service, something Sprint hasn't even done. Sprint largely relies on prepaid arms Virgin Mobile and Boost Mobile, but later this month will launch its own Sprint-branded prepaid option with a limited array of phones.

While T-Mobile's contract business continues to hemorrhage, it has seen growth recently thanks to its wholesale and prepaid businesses. In the third quarter, T-Mobile added a net 160,000 customers, but that includes a loss of nearly half a million contract subscribers.