T-Mobile adds $40 'Simple Starter' plan, promises more moves ahead

T-Mobile US (NYSE:TMUS) introduced a low-end $40 plan and promised other competitive moves in the days ahead as it seeks to continue shaking up the market with its "uncarrier" push.

"Not only aren't we done, we will never be done. We've hardly gotten started," T-Mobile CEO John Legere wrote in a company blog post. "We will keep listening to our customers because they are innovating and showing their creativity in the way they are using wireless.  So, starting with this morning's news, we have three days of Un-carrier announcements for consumers--again the result of listening directly to their wants and needs. That is what the Un-carrier does!"

The first move is what T-Mobile calls its "Simple Starter" plan, which includes unlimited voice, texting and 500 MB of LTE data. Once a user reaches the 500 MB of high-speed data, the service is suspended, and customers would need to buy either a 1-day on-network data pass of 500 MB for $5 or a 7-day on-network data pass of 1 GB for $10.

The plan also does not include international service packages or roaming. The plan costs $40 per month, though because T-Mobile does not subsidize devices, if a customer is paying for their phone through an equipment installment plan, that monthly charge, which can be as much as $25 per month, will be added to their bill.

Leger took aim at his favorite punching bag--AT&T Mobility (NYSE: T)--noting that "with AT&T's entry-level plans, for example, your costs immediately jump by increments of $20 when you slip over the threshold into massive overages--in what amounts to an obscene 44% price hike on those customers least able to absorb overages and bill shock. It's wrong. And I personally want to drive those predatory bait-and-switch schemes out of this industry."

AT&T's entry-level Mobile Share Value plan costs $20 for 300 MB of data and unlimited voice and texting, as well as a charge of $25 per month per smartphone if a customer does not have a two-year contract and $40 per month if they do have a two-year contract. AT&T charges $20 for 300 extra MB of data.

"Our work of transforming wireless on behalf of American consumers is far from done," Legere wrote. "Stay tuned in the days ahead."

"We've been a little quieter lately," T-Mobile CMO Mike Sievert told Re/code. For those who thought T-Mobile was done making competitive changes, Sievert says "they were far from correct."

In a series of posts on Twitter, Sievert had hinted at the moves. He said that "It's time for another big throw-down from T-Mo. We're changing wireless for the better, again. Just watch our next move, coming VERY soon." He soon clarified that T-Mobile would be making multiple changes. "I guess I should say moves. Watch our next moves, as in, more than one. So many problems to solve in this market.. just getting started!"

However, when asked if the new changes would amount to "Uncarrier 5.0" Sievert replied, "Not yet! But some very exciting stuff..."

It's unclear what other changes beyond T-Mobile has in store but they are likely more in line with the company's decision to end employee rate plan discounts for new customers than its January move to pay up to $650 to cover the Early Termination Fees of customers who switch to T-Mobile and trade in their phones. The ETF move was "Uncarrier 4.0," the fourth in a series of moves T-Mobile has made in the last year to shake up the industry and grab market share.

T-Mobile's actions have been paying off. A recent research note from analysts at Jefferies indicated that T-Mobile will likely report increased subscriber gains in the first quarter. According to the analysts, those gains will likely be at the expense of Sprint (NYSE: S).

"After positive management commentary at investor conferences, and recent price increases, we believe the company's record 4Q subscriber momentum likely continued into 1Q," Jefferies analysts wrote of T-Mobile. "As such we have raised our 1Q postpaid net add estimates from 1.0 million to 1.1 million, and fiscal year 2014 from 3.1 million to 3.2 million, above guidance of 2-3 million."

Last year T-Mobile introduced its no-contract "Simple Choice" plans, its Jump handset upgrade program (which other carriers have emulated) and offered tablet customers 200 MB of free data as long as they keep the tablet activated on T-Mobile's network, regardless of whether they have a tablet data plan. In the last three quarters T-Mobile has added a total of 3.7 million net new subscribers, though it has also reported combined net losses of $72 million during that period as well. In the fourth quarter T-Mobile reported a widening loss of $20 million, partially due to its efforts to add new customers.

For more:
- see this T-Mobile blog post
- see this Re/code article
- see this TMoNews article

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Correction, April 9, 2014: The article incorrectly stated that once a T-Mobile customer uses 500 MB of data on the Simple Starter plan they will see their data speeds throttled. In fact, data service is cut off and customers must purchase a daily or weekly data pass.