Sprint knocked for marketing $20/month plan as 'unlimited,' despite throttling down to 2G speeds after 1 GB

Sprint (NYSE: S) was criticized by several technology news sites for marketing a new $20 per month plan yesterday as "unlimited" even though after 1 GB of high-speed data usage, customers will see their speeds reduced to 2G speeds for the remainder of their billing cycle. Sprint counters that it is providing customers with choice and will not charge overage fees, and that if customers want more high-speed data, they can simply purchase more.

Sprint said customers can choose a 1 GB high-speed data option for $20 per month, and then also get unlimited voice and texting for an additional $20 per month while on the Sprint network (a price which excludes taxes and surcharges). Sprint Global Roaming also is included with the plan.

Customers on the new plan will not be charged overage fees and can purchase additional high-speed data for $15 per 1 GB.

The Verge called Sprint's plan "garbage." BGR advised readers: "Don't fall for Sprint's $20 'unlimited' data plan." Droid-Life characterized Sprint's new plan as being "greasily" advertised. And Android Authority called it "shameless."

"The desperate mobile carrier isn't the first to offer low-cost, low-service plans like this -- T-Mobile, for instance, has an almost identical one they call 'Simple Choice'  -- but they are the first carrier to try to spin this bug into a feature by using blatantly misleading language," Android Authority said.

The headline in Sprint's press release starts: "Sprint Beats All National Carriers with Unlimited Data for $20/Month," and Sprint calls the $20 per month plan its "Starter Unlimited Data Plan."

As many noted, T-Mobile US (NYSE:TMUS) markets its "Simple Choice" plans as providing "Unlimited talk, text and data while on our network with no overages or annual service contracts," and its 1 GB/$50 plan is marketed thusly: "Up to 1 GB of 4G LTE data per month. 4G LTE data is available while in the U.S., Mexico, and Canada. After all your 4G LTE data is used, data speeds are reduced to 2G speeds through the end of your bill cycle. Add more 4G LTE data whenever you want."

"Sprint is all about choice. And, we know our customers don't want to worry about unexpected overage charges on their monthly bill," Sprint spokeswoman Kristin Wallace said in a statement to FierceWireless. "We are giving customers both choice and the ability to manage their monthly data cost with this new offer. When they reach their high-speed data limit, customers will get unlimited 2G speeds or they can buy additional high-speed data if that better fits their needs. We want to give customers the ability to choose the best option for their lifestyle and budget and not have to worry about overages."

Sprint said customers on its new Sprint Family Share Pack plans will not be charged data overage charges on their monthly bill when they reach their high-speed data limit. Sprint said customers will get unlimited 2G data. If customers need more high-speed data in a month, they have the option on the Starter Unlimited Data Plan and the Sprint Family Share Pack to buy an additional high-speed data allowance for just $15 per GB of data.

Sprint also introduced a $70 "Unlimited High-Speed Data Plan" that includes 3 GB of mobile hotspot usage and Sprint Global Roaming. Additional lines with the same unlimited high-speed data, voice and texting are just $60 per line (for up to 10 lines).

Jefferies analysts Mike McCormack and Scott Goldman said in a research note that "Sprint's network remains far behind that of its peers, and we do not see today's announced pricing plans as a threat to the peer group."

"We believe today's pricing action will have limited impact on share shift, with most family plan customers finding much better network and value in competitive offers, particularly the 4 for $120 (10 GB each) plan at T-Mobile," they said. "We do not believe that even at a $10 discount to T-Mobile for a single line unlimited plan, customers will be apt to move to the Sprint network."

"Further, the limited data plan will likely target low-value customers, and, in our view, compete more with prepaid calling plans which are in some cases less expensive (though lack some features such as international text/data)," they added. "We believe driving price down at the low end will only result in future churn increases, and could be an indication of Sprint's continued share loss to peers."

For more:
- see this Sprint release
- see this The Verge article 
- see this BGR article
- see this Droid-Life article 
- see this Android Authority article 

Related articles:
Sprint to start throttling unlimited plan customers if they use more than 23 GB of data in a month
AT&T now lets customers with unlimited data plans use 22 GB before throttling them
Verizon quietly ditched policy to throttle heaviest 3G users with legacy unlimited data plans
AT&T calls FCC's proposed $100M fine for throttling 'unprecedented and indefensible'
Sprint ditches 600 Kbps streaming video speed limit after outcry