T-Mobile Data and Voice Price War?

To every potential price war I say "bring it!" T-Mobile, which just suffered a massive PR snafu with the sidekick data loss disaster, is potentially going to lower the cost of unlimited data and voice plans in the US to lure subscribers (potentially from Sprint) according to reports. Unlimited plans might come down to between $50 and $80 reportedly. 

If this happens some financial analysts believe that Sprint is the most vulnerable of the big carriers to subscriber defections. However, if prices go low enough, so are the smaller pre-paid carriers. Sprint's Boost pre-paid unit has had a very successful $50 "all in" plan for some time; however the network is the inferior NexTel network and handset selection is limited. So it hasn't attracted many post-paid converts. 

T-Mobile believes that the US market can support four major competitors and suggests that it won't be seeking to do any dramatic deals such as the joint venture with France Telecom in the UK. 

In the UK, the availability of the iPhone from O2, Orange and Vodafone means a big price war with the Apple handseet dropping to free potentially, with a 24 month contract. Something similar might also happen if the iPhone were available from multiple carriers in the US, although it's unlikely that we'd ever see it go free. 

The larger point is that competition (and a certain amount of desperation) is driving prices down. Sprint recently announced a free mobile to mobile calling plan that allows any subscriber to call anyone else on a mobile phone without counting against plan minutes. Only landlines are charged. With the exception of AT&T with the iPhone all carriers have now is pricing -- and to some degree their network reputations -- to compete with. This notwithstanding the efforts of Verizon to be an apps provider or Vodafone to build a social software layer onto handsets. The era of the "dumb pipe" has arrived. 

If T-Mobile USA in fact drops unlimited voice and data plans to $50 or $80 Sprint may be forced to match. However, AT&T and Verizon will likely take a wait and see approach rather than automatically lower prices because they both feel more secure in their subscriber retention.