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T-Mobile targets budget-conscious with $40 'Simple Starter' plan

T-Mobile says its plan, which includes 500 megabytes of capped data, differs from the "bait and switch" low-end plans offered by Verizon and AT&T.

T-Mobile CEO John Legere at the company's press conference at CES 2014. CNET/James Martin

T-Mobile is at it again.

The upstart wireless carrier on Wednesday unveiled its latest shot at the broader industry, a $40 "Simple Starter" plan that includes unlimited talk and text and 500 megabytes of capped data. The plan will be made available in stores on Saturday, with a prepaid version coming on May 17.

The plan is a reaction to the budget-friendly affordable plans offered by AT&T and Verizon, underscoring the intensifying competition for the low end of the wireless service market. Over the last few months, all of the carriers have been offering more attractive plans to customers who use little to no data on their phones. T-Mobile is looking to defend its base.

"It's a strong statement not to f@#& around with our market," T-Mobile CEO John Legere said in an interview with CNET.

T-Mobile believes its plans offer an advantage because there are no overage charges found at AT&T and Verizon. Chief Marketing Officer Mike Sievert called the plans offered by his two bigger rivals "predatory."

"I don't think it's overstating it to call them a bait and switch," Sievert said in an interview.

Spokesmen for AT&T and Verizon Wireless declined to comment.

The other carriers have been busy. Verizon has recently pushed its , which includes a lower end plan that costs $45 a month. AT&T also revamped its family plans to offer more savings under its Mobile Share program.

Under T-Mobile's Simple Starter plan, a customer loses data access at 500 MB. Once a customer gets near the 500 MB limit, a message pops up offering the ability to pay for additional data. A customer can pay $5 for an additional 500 MB for the day, or $10 for 1 GB to be used over the next week.

That's unlike the $50 Simple Choice plan T-Mobile offers, which includes 1 gigabyte of data. Once a customer hits 1 GB, T-Mobile slows down the data connection, but can still browse the Internet on a "throttled" line. Simple Starter shuts you down completely unless you pay up for more access.

Simple Starter has other limitations. It can't be bundled with a family plan and is meant for individuals. It also doesn't have extra features such as global roaming or international texting.

The plan does qualify for zero-down device financing and T-Mobile's Jump upgrade program. T-Mobile will also pay the early termination fee of a customer willing to switch.

"A tremendous amount of people are waiting to try T-Mobile," Legere said. "It's a way to try this out."

T-Mobile shares rose 25 cents, or 0.8 percent, to $31.43.