Is T-Mobile USA Entering The $50-A-Month Voice Plan War?

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Is T-Mobile USA Entering The $50-A-Month Voice Plan War?

T-Mobile USA launched a trial in San Francisco two weeks ago that allowed customers to sign-up for unlimited voice for $50 a month, but now there’s evidence that it is quickly expanding the offer to more customers nationwide. Ironically, it was RCR Wireless News, which shut down today, that first reported the move. The publication reported that staff at RCR was able to sign up for the offer in two different locations, and that it appears any customer in any location who has been with T-Mobile USA for 22 months or longer can sign up for the promotion. T-Mobile is not providing any more details, but said in an official statement: “We are offering select customers pricing plans that reward their loyalty to T-Mobile. We do not comment on pricing policy for competitive reasons.”

It wasn’t very long ago when carriers started offering unlimited voice plans for $100 a month, but a slew of regional players and MVNOs over the last year, have been putting additional price pressure on the four major carriers to discount rates even more. Recently, Boost Mobile, the MVNO running on Sprint’s smaller Nextel network, started offering a $50 plan that includes unlimited voice, texting, Web access and push-to-talk services. That matches other regional players such as MetroPCS and Leap, which offer plans for $45 to $50, but are limited geographically. Virgin Mobile USA (NYSE: VM), which runs on the Sprint (NYSE: S) network, offers an $80 unlimited plan. RCR points out that T-Mobile is pairing its $50 unlimited voice plan with a $35 unlimited text and data plan for a total of $85 a month, which matches a similar data plan being offered for the T-Mobile G1.

It’s hard to understand why T-Mobile is headed in this direction because it seems like it would cannibalize revenues from two of its flagship services: the company’s HotSpot@Home service, which offers unlimited calling over Wi-Fi, and its MyFaves program, which offers unlimited calling to five of your favorite people. Each costs more money, but often requires a minimum voice plan of about $50 to qualify. Why would customers sign up for either service if they had an unlimited voice plan for $50 a month? Perhaps, T-Mobile has retention problems. In Q4, it said churn jumped to 2.4 percent, among contract holders, from 1.8 percent in the same period a year earlier. One reason for the higher churn? “Competitive intensity,” the company said. Sort of gives new meaning to the company’s slogan: “Stick Together.”

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Tricia Duryee

@triciad Mar 3, 2009 8:09 PM ET

Posted In: Companies, Helio, SprintNextel, T-Mobile, Virgin, Virgin Mobile

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Michael D. Albano

Metro PCS, Leap and Boost all have their plusses. Metro and Leap overlap in primarily two markets, share each others spectrum for free roaming and both were doing well and are even doing better in this economic downturn.

Boost's new $50 all you can eat plan is finally a huge success as well, after their failures with the IDEN all you can eat push to talk and their $50 unlimited plan with no features. The best could be yet to come with Boost Mobile, yet since the new Boost plan is in its infancty and knowing that parent company Sprint often takes questionable directions, it is too early to tell how successful it will be.

The main issue that I see at this point that may determine the success and/or failure of Boost is the dire economic state of Motorola that is the only manufacturer of Boost IDEN phones. Even though IDEN is a bit dated, the fact that Motorola does not manufacture enough of a variety of Boost Mobile phones and that no other manufacturer produces Boost Mobile phones is a big red light, in my opinion. Prospects that only have the option of one manufacturer and one that only offers Boost an average of 5 models, versus Metro and Leap that offer between 14-20 at any given time, still makes it a rough road ahead for Boost. Should Motorola fail and go BK, not find a buyer or even find a buyer for Motorola's wireless division, Boost may still face some challenges that Metro and Leap most likely will not face.

I'd put my "money" on Metro and Leap, in that order before I'd put all my "eggs in one basket" with Boost…

Tatum Hawkins, Boost Mobile

Tatum Hawkins from Boost Mobile here ...

Just to clarify, Boost is not an MVNO, we are a wholly owned subsidiary of Sprint. Also, our recently launched $50 'Monthly Unlimited' plan that includes nationwide talk, text, Web and walkie-talkie doesn't match the similar unlimited plans by MetroPCS and Cricket, it blows them out of the water. Our plan offers the most value to consumers at a straightforward price point.

For example, MetroPCS's and Cricket's $45/mo unlimited plans really mean up to $53.50 and $62, respectively when you add on over-the-counter fees, roaming charges and telecom taxes. No one wants to pay more than an advertised price. With Boost, $50 means $50.

digital bear

Have any of these firms broken out their estimates of subscribers per payment plan—it seems like you could back into their scenario planning for T-Mobile (or just realize that this economy is bringing out all the desperate tactics including proving out that they really don't need to charge what they do to make $$ but have a scalable technology platform.)