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T-Mobile cuts the strings on new data plan, goes fully unlimited

The carrier is following in the path of Sprint Nextel and targeting heavy data users with no caps or throttling.

Samsung's Galaxy S III smartphone
Go crazy with the Galaxy S III on T-Mobile USA.
Josh Miller/CNET

With Verizon Wireless and AT&T piling on more restrictions to their data plans, T-Mobile USA is going the opposite route with a new truly unlimited plan.

Starting September 5, T-Mobile will take a page out of Sprint Nextel's playbook and offer a truly unlimited data plan -- one without any caps, throttled connections, or overage charges.

T-Mobile says that customer demand has driven the change, but the move comes after Verizon and AT&T have both moved away from unlimited plans and focused on capped shared data plans that have irked some consumers with their complicated options. T-Mobile argues that the offering is superior to Sprint Nextel, which also offers a fully unlimited data plan, but lacks the same coverage for high-speed wireless services.

"We think it's counter-punch to every option that's out there," said Harry Thomas, director of segment marketing for T-Mobile.

T-Mobile is a distant fourth-place among the national carriers and needs every edge it can get to catch up. The company has seen its contract customers defect, either moving up and signing a contract with one of the other nationwide carriers, or moving down to one of the more affordable prepaid options.

Given the attention that data limits have gotten, T-Mobile could see some customers giving it a second look. Sprint has already said its unlimited plan has helped set it apart, particularly when paired with the iPhone.

T-Mobile is one of the few carriers that doesn't sell the iPhone, but it offers a micro-SIM card that allows consumers to bring unlocked iPhones from rivals.

The move to unlimited seems to fly in the face of the carrier's rhetoric about capacity constraints -- arguments it made when it was poised to be acquired by AT&T. But Thomas said T-Mobile is working to ensure there is enough capacity for its users. In addition to obtaining spectrum from AT&T as part of the break-up fee from the failed merger, the company is planning to swap spectrum with Verizon Wireless to improve coverage and is investing $4 billion in improving the network.

There are some restrictions. Customers can only choose to pair a smartphone with the unlimited option, and the mobile hotspot feature, which can connect other WiFi-enabled devices, isn't available under the plan.

T-Mobile will keep its current line-up of plans with their restrictions. When a certain level is reached, T-Mobile will slow down the connection to a crawl, a practice known as throttling. But under its premium 5GB and 10GB plans, the hotspot feature is included.

The unlimited data plan costs $30 a month when bundled with a voice and text plan, which range between $49.99 and $59.99 a month, depending on whether the customer wants 500 voice minutes or an unlimited voice plan. Under its "value" no-contract option costs $25 on top of a bundle of voice and text messages, which ranges between $39.99 and $49.99.

In comparison, Sprint's unlimited data plans for smartphones range between $79.99 and $109.99, depending on the number of minutes available.

Regional prepaid carrier MetroPCS, meanwhile, introduced yesterday a similar no-strings unlimited plan for $55, although it was described as a promotional offer with no set expiration date.

The T-Mobile plan will be available to existing and new customers, Thomas said, adding that this wasn't a promotion, but a permanent option.