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  (Source: CNN Money)
Plans offer a generous bucket of data and a lot of options, but also hidden costs

With Dan Hesse out and Marcelo Claure in as CEO, Sprint Corp. (S) unveiled its first major revision to its plans -- the phase out of unlimited data.  The beginning of the end for Sprint's "unlimited" data days was hinted at with the arrival of the Sprint Family Share Pack, which ditches the unlimited data option of previous "Framily" plans.

I. The (Long-Coming) Death of Unlimited Data

For Sprint customers saddened by the beginning of the end of your unlimited data, the writing has been on the wall for some time now.  

A half decade ago T-Mobile U.S., Inc. (TMUS), Verizon Communications Inc.'s (VZ) Verizon Wireless, and AT&T, Inc. (T) offered unlimited data options, just like Sprint.  AT&T was the first to turn its back on unlimited data, moving to a capped alternative in mid-2010.  Verizon and T-Mobile followed in suit in May 2011.  This capping followed both networks starting to throttle their heaviest users' data speeds in the waning days of their "unlimited" data offerings.

Both Verizon and T-Mobile softened the blow with (at the time) competitive family plans.  Sound familiar?

To be fair, Sprint promised its customers that its unlimited data would last forever.  When T-Mobile pulled the plug in mid-2011, former CEO Dan Hesse admitted at a telecom conference that Sprint might eventually follow in suit.  But Sprint held off the longest, leveraging its bucket free plan as an advertising gimmick.

Sprint unlimited data
Sprint long used its defense of "unlimited" data plans as an adveritsing gimmick.  Now it's ditched unlimited and joined the pack, offering data buckets and caps.

But in the end Sprint has followed a nearly identical trajectory, although it's taken the longest to pull the plug on unlimited data.  Much like T-Mobile, it announced in May that it would begin throttling its heaviest "unlimited" plan users in June.  Now with the arrival of family plans and nary a mention of "unlimited data", this all too familiar transformation is complete.

Much like T-Mobile, Verizon, and AT&T, Sprint will presumably continue to honor the unlimited terms of its so called "grandfathered" contracts -- users who have yet to sign a new contract and cling to their carrier who contractually promised them "unlimited" data when they signed up.  But the days of unlimited data are at an end for new subscribers.

II. A Complicated Family

So the natural next question is -- "If free data is dead, are the family plans a good deal, at least?"

That's an interesting question.  Sprint is advertising its plan in a pretty sneaky/disingenuous way, comparing its plan to the family plan rates of its rivals, including 4-line, 10 GB plans from T-Mobile ($100 USD/month) and AT&T ($160 USD/month).  But Sprint's plan is rather complicated and a rather costly catch soon becomes apparent.

But first, let's examine what Sprint appears to be offering, before digging into what it's really offering

Sprint appears to be offering 20 GB for $100 USD/month, plus is tossing in an additional 2 GB per non-tablet device (line) per month.  So a family of 4 would pay $100 USD/month and get 28 GB, and a family of 10 would pay $100 USD/month and get 40 GB.

Sounds great, right?

Gordon
Critics say Sprint's family deals are kind of like the personal relations of the Sprint framily -- complicated.

Well, T-Mobile's outspoken CEO John Legere had a choice word or two about Sprint's pitch. He took to Twitter (as usual), writing: Is he right?

III. The Joy of Access Fees -- Forcing You to Pay More for Less Data

The short answer is yes.  The good part of Sprint's plan is that it is seemingly pretty generous with its data buckets:
Sprint buckets
There's a very big catch to Sprint's rates that you discover as you read on.  You'll notice the magic words in the figure above -- "access fee".  Where T-Mobile and AT&T include the price of the lines in their plan, Sprint doesn't.  Sprint charges $15 USD per line.

What's more, in a bizarre move, for buckets 12 GB and below it charges $25 USD per line.  What does this mean?  It basically means you either have to switch to an extremely small shared bucket, or switch to a more expensive plan.

Let's say you have a family of 4 and you decide you don't really need 28 GB.  Well Sprint offers an 8 GB bucket for $70 USD and a 12 GB bucket for $80 USD.  You'd just switch, right?

Sprint family plan

Well, not so fast.  If you opt for a bucket below 20 GB, not only does the additional 2 GB/line temporary promotion drop away, you also are forced to pay a higher access fee of $25.  So a family of 4 pays:
  • $160 USD/month ($100 data + $60 access fees) for 28 GB (20 GB bucket + 8 GB promotion)
  • $180 USD/month ($80 data + $100 access fees) for 12 GB
  • $170 USD/month ($70 data + $100 access fees) for 10 GB
In other words, Sprint uses a sneaky bump to its access fees to basically force everyone to buy a larger data bucket and be on the hook for higher monthly rates.  Decline, and you'll be stuck paying more for a smaller bucket.

All that said, Sprint's deal is still pretty competitive -- for now.

For a family with 8 lines, for example, you'll be paying $220 USD/month, but will get a 36 GB pool with the promotion.  With T-Mobile you would have a more straightforward billing scheme -- 2 x 4-line, 10 GB, $100 USD/month plans -- for a grand total of $200 USD/month for 20 GB.  So on Sprint's plan you're paying more, but also getting more data.

III. For Now There's a Good Deal Hidden in The Mess

Now you have to factor in the state of Sprint's network.  To its credit Sprint reaches more customers with LTE coverage than T-Mobile.  At last count it covers 254 million Americans in 488 markets.  While behind Verizon and AT&T, this is a little ahead of budget rival T-Mobile, who currently covers 233 million Americans in 325 markets.

But where Sprint wins marginally over T-Mobile in coverage (and loses to Verizon/AT&T), it loses badly in LTE speeds, according to recent tests.  In the handful of markets where its advanced-LTE bid, Project Spark, is available it's faster than T-Mobile, potentially even the fastest carrier overall.  

Sprint Spark
Sprint's Spark program is bringing advanced LTE technology to select U.S. markets.

But in most markets it trails T-Mobile and Verizon in speeds anywhere from moderately to severely.  Suffice it to say Sprint's speeds are highly dependent on where you live and visit in the country, making it much like Sprint's new plans -- complicated.
 
For many, though, the lure of Sprint's 2 GB per line promotion will be too great to resist.  Admittedly, while the promotion lasts it is a better deal than T-Mobile offers on a per gigabyte basis, despite forcing customers into more expensive plans.  Sprint has followed in T-Mobile's line and is currently offering to pay up to $350 USD in early termination fees (ETFs) (via Visa Inc. (V) gift card of equivalent amount to your ETFs) for new subscribers.
 
For now the plan may be enough to convince some new customers to join the ranks, helping Sprint to try to hold off a surging T-Mobile.

Sprint
Killing unlimited data may alienate Sprint holdouts, but it may lure some subscribers with its 20 GB bucket deal.  In the long run, though, T-Mobile is threatening to bump it to fourth.
[Image Source: Reuters]

But upon closer examination only one part of the new Family Plans -- the 20 GB bucket -- is truly competitive with T-Mobile's Family Plans, and it's only competitive thanks to its extra 2 GB per line promotion.  Move to other buckets and you lose that promotion and quickly Sprint's offerings appear much more overpriced.

That brings us to a final point.  While these plans may indeed pull in some new subscribers, the question is what Sprint will do in the long term.  It's billing the 2 GB extra for new subscribers as a "Limited Promotion".  Currently Sprint's plan is onerously complex and rather sneaky in terms of its fees.  But hidden in there is a good deal, if you go the route it's leading you (the 20 GB bucket w/ +2 GB per line).

However, if at some point Sprint cancels its +2 GB per line promotion, this good deal will be gone and customers will be left with a truly unappealing family (or "framily"?) plan.

Sources: Sprint [press release], John Legere on Twitter [1], [2]





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