T-Mobile has pulled off a mobile industry first: it has reinstated the unlimited data plan after a year’s hiatus, showing that there may be a plausible business case after all for unfettered access to the mobile internet. Starting Sept. 5, it will begin offering an unlimited option to its smartphone plans.
Before you get too excited there is one big caveat: you are not allowed to tether your smartphone or use it as a mobile hotspot. T-Mobile’s not crazy. It doesn’t want to open up its network to the full brunt of the PC-and tablet-driven internet. But whatever you can do on your smartphone — short of sharing your connection — is fair game: Netflix(s nflx), YouTube(s goog), massive file sharing, you name it. According to T-Mobile, it won’t throttle or cap.
Director of Marketing Harry Thomas said T-Mobile is revisiting the unlimited plan simply because that’s what its customers want. The issue wasn’t megabyte stinginess –- T-Mobile already offers the biggest buckets of smartphone data for the cheapest prices in the U.S. with the exception of Sprint(s s). Instead, T-Mobile is targeting the customer that frets over his monthly data consumption -– the one that worries about whether he can still download a video or stream music without breaching his data cap, Thomas said.
“We’re going where our customers are leading us, and unlimited is where they’re telling us to go,” Thomas said.
The unlimited plans will come in two flavors depending on whether you paid for your phone up front or took advantage of one of T-Mo’s subsidized devices. Value plan — or unsubsidized –- customers pay $20 a month, while classic –- subsidized –- customers pay $30. The value plan is pretty much the cheapest data plan in wireless data among the nationwide operators. Sprint’s unlimited plans cost $30 and are still restricted primarily to its 3G CDMA network, while T-Mobile offers much faster HSPA+ speeds in 229 markets. At AT&T(s t), $20 will get you a measly 300 MB, while Verizon Wireless(s vz)(s vod) has stopped selling individual data plans entirely.
T-Mobile is keeping its metered plans in place for customers that do want to use their phone’s hotspot capabilities. Ironically, that means you would pay more for a 5-GB plan ($25 for value, $35 for classic) than you would for an unlimited one.
A lot of people in this industry have opined — myself among them — that the unlimited data plan is endangered species, an untenable business model in a world where mobile capacity is so constrained. But Thomas said T-Mobile believes that unlimited is still a viable strategy. It’s not a limited promotion or some loss-leading pricing gimmick to stem its customer losses, he said: T-Mobile expects to make money off these plans.
That’s a bold statement coming from T-Mobile considering just how much data its customers consume. The carrier recently revealed that its average smartphone customer eats up 760 MB a month, far higher than the industry average. On its 42-Mbps dual-carrier HSPA+ network that number increases to a whopping 1.3 GB a month.
If Thomas is right about unlimited being a viable business for T-Mobile, then that raises a very interesting question: If unlimited can work for T-Mobile, why can’t it work it for AT&T and Verizon?