Consumers winning as Sprint wages price cutting war

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Sprint Drops T-Mobile Bid, Replaces CEO and Goes in New Direction
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Sprint reportedly drops discussions with T-Mobile US about acquiring the company. In addition to France's Iliad SA, which launched a $15 billion offer for 56.6% of T-Mobile, The Deal correspondent Andrew Bulkeley reveals the other main suitors for the company. As antitrust concerns likely played a large role in Sprint stepping away from a potential deal with T-Mobile, Bulkeley explains what companies would not face related challenges in seeking an agreement. Also, upon announcing it's named Marcelo Claure, founder of mobile phone distributor Brightstar, its new CEO, Bulkeley weighs in on what this says about the new direction Sprint is heading in.

Regulators have been shooting down wireless carrier mergers lately, and the results for consumers have been terrific, at least so far.

This week Sprint (S), the third-largest carrier, is slashing prices and offering one of the best deals on the market for families that use lots of data. Or, at least for families that use lots of data and live in areas with solid Sprint network coverage. And the company said it would also soon be introducing new, lower-priced individual plans.

The changes follow more than a year of price-slashing moves by T-Mobile US (TMUS), and even reactive price cuts by the two wireless giants, AT&T (T) and Verizon (V). Analysts say there’s likely a lot more to come, as the carriers vie for customers in the mature U.S. mobile market, especially after Apple (AAPL) releases new iPhones next month.

"Although tactics have differed, the messages across all the operators, even Verizon, have been resoundingly clear: the era of the high-value customer is but a bygone relic," writes Craig Moffett of MoffettNathanson. "Wireless looks poised to become even more competitive."

Under Sprint’s new plan, a family switching from another carrier with up to 10 phone lines will pay only $100 a month for 20 gigabytes of mobile, high-speed data plus 2 extra gigabytes per line. A family of five would pay just $100 for 30 GB of data per month, though that doesn’t include the cost of buying phones. Pricing is good through the end of 2015, and customers must sign up by the end of September.

AT&T and Verizon charge $225 for that much data plus $15 per line, or a total of $300 per month, plus phone costs. T-Mobile’s best sliding-scale pricing would end up costing $210 for five lines each with 5 GB per month, according to research from Credit Suisse.

However, few customers use anything close to that much data per month. AT&T and Verizon offer plans for four lines and 10 GB of data for $160, while T-Mobile last month started a promotion for four lines with 2.5 GB of high-speed data per line for $100 a month through 2016.

Sprint’s Japanese billionaire owner Masayoshi Son and new Bolivian billionaire CEO Marcelo Claure had few other options besides cutting prices. Regulators weren’t going to approve their plan to acquire T-Mobile, the fourth-largest U.S. carrier, and Sprint’s own network is lagging in speed and coverage. Sprint dropped to fourth, surpassed by an improving T-Mobile, in a recent test of nationwide network quality done by Rootmetrics.

Sprint also copied T-Mobile CEO John Legere’s popular offer to cover the cost of early termination fees for customers switching from a rival carrier, as long as the customers turn in their old smartphones. Sprint is offering up to $350 per family versus a $650 cap at T-Mobile.

Verizon was also in price-cutting mode this week, but for individuals, not families. The carrier reduced the price of a single smartphone with 2 GB of data to $60 per month from $90. And T-Mobile expanded its family plan to allow more than four lines, with six lines each with 2.5 GB for $120 and additional lines (up to 10) at $20 each.

Sprint also said it was dumping its widely ridiculed “Framily” program that allowed unrelated people to link up and qualify for discounted monthly fees. Legere, one of the chief Sprint ridiculers, tweeted:

 

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