T-Mobile counters Boost with $50 flat-rate plan

T-Mobile today began offering a $50 unlimited calling plan to customers who have been with the carrier for 22 months or longer. The service, beginning with a trial in San Francisco, comes at the same time Boost Mobile is ramping up its nationwide rollout of a marketing campaign around its $50 Unlimited plan that includes no hidden costs or additional charges.

When Sprint’s prepaid arm Boost Mobile made the move to $50, some feared it would trigger another price war, as Verizon’s $99 flat-rate pricing did back in March when it was quickly followed by AT&T, T-Mobile, Sprint and Alltel. However, Neil Lindsay, vice president of marketing for Boost Mobile, said this was neither Boost’s intention nor its expectation. To date, the two largest carriers, Verizon and AT&T, have focused on adding to their prepaid offerings and introducing flexibility into their billing but might not feel pressured to follow suit at $50, since the deal won’t be poaching new customers.

For those T-Mobile customers with data and texting plans, the new $50 unlimited plan will lower their monthly bill to $85 per month, down from $100, which is the cost of third-largest carrier Sprint’s Simply Everything plan, including voice, data, text and GPS.

T-Mobile has been struggling in the postpaid business in recent months. The fourth largest carrier, known for its value and prepaid plans, saw its contract customer additions fall to 267,000 in the fourth quarter, making up just 43% of its net additions, compared to 773,000 of overall adds the same time last year. T-Mobile is likely trying to reinvigorate its postpaid business as the majority its customers are switching to prepaid plans. The 22-month requirement also means it won’t help them win over new customers, but it could reduce churn – another increasing factor at T-Mobile. As two-year contracts instituted in 2006 expired, T-Mobile’s contract churn rose to 2.4% in the fourth quarter, up from 1.8% a year ago.

In an effort to woo new subscribers as well, T-Mobile will also offer a $135 rebate for customers who switch their wireless service to the carrier.