T-Mobile USA Testing $50 Calling Plan For Existing Customers
20 February 2009 - 6:05AM
Dow Jones News
T-Mobile USA is offering existing customers in San Francisco a
$50 flat-rate calling plan in another sign of an emerging price war
for low-end wireless customers.
The No. 4 U.S. wireless carrier, a unit of Deutsche Telekom AG
(DT), began offering the plan Wednesday to customers who have been
with T-Mobile USA for 22 months or more. It's the first return
salvo aimed at Sprint Nextel Corp.'s (S) Boost Unlimited, which
last month unveiled its own $50 flat-rate plan.
T-Mobile USA won't comment on test market activities, according
to spokeswoman Cara Walker.
But T-Mobile USA stores in San Francisco are actively pushing
the plan, including calling up and alerting customers of the new
$50 rate.
Customers won't have to extend their contract when they switch,
although they'll have to honor the terms of the existing contract.
The plan is for individuals and only includes unlimited
calling.
Boost Mobile shook up the industry by offering a flat-rate $50
plan, which includes unlimited calling, text messages, Web surfing
and walkie-talkie service. Boost's main targets are Leap Wireless
International Inc. (LEAP) and MetroPCS Inc. (PCS), which offer
similar unlimited plans but with regional restrictions. But Sprint
also saw T-Mobile USA as vulnerable to cherry-picking.
In the fourth quarter, T-Mobile USA added 621,000 net new
subscribers, down both sequentially and from a year ago. The
turnover rate of 2.4% was also up from a year ago.
T-Mobile is being squeezed by the low end with Virgin Mobile USA
Inc. (VM), Leap and Metro, while high-end players such as AT&T
Inc. (T) and Verizon Wireless continue to nab the best customers.
Verizon Wireless is jointly owned by Verizon Communications Inc.
(VZ) and Vodafone Group Plc (VOD).
Sprint Chief Executive Dan Hesse, in an interview with Dow Jones
Newswires Thursday, said he expected rival carriers to respond
competitively, although he didn't think a price war would
erupt.
But Sanford Bernstein & Co. LLC analyst Craig Moffett said
any signs that Sprint was making progress with its cheaper plans
could spark an aggressive response by competitors.
"As the market opportunity contracts, any real sign of a
turnaround at Sprint would decisively undermine targets at Sprint's
competitors," he said.
Sprint's battered shares are up 28% to $3.47. Deustsche Telekom
shares are flat at $12.04.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020;
roger.cheng@dowjones.com