Will Sprint and T-Mobile Have to Lower Prices?

The recent "price war" between US carriers Verizon and AT&T puts number three and four carriers Sprint and T-Mobile in a bit of a difficult position. Both had been competing on price, although more recently there has been a greater hardware focus in their marketing.

There's a considerable gap between Verizon and AT&T subscriber numbers and T-Mobile and Sprint. Will the two smaller carriers respond and further lower prices? For now, according to the WSJ, Sprint isn't going to: 

Sprint—suffering from an image problem following its Nextel merger—has used the lure of lower prices to try to stem customer defections. Price cuts by Verizon Wireless and AT&T Inc. have narrowed that advantage.

For example, a plan with unlimited calling, texting and data transfers costs $100 at Sprint. That same plan is now only $120 at AT&T or Verizon, compared with $150 before the price cuts that took effect Monday.

Sprint has a strong network (now with excess capacity because of subscriber losses) but that hasn't been able to stop the bleeding. The company's future hinges on its ability to deploy 4G faster than its rivals. But it may not be able to if cash becomes too tight and/or as Verizon and AT&T both seek to aggressively roll out LTE.

If the iPhone does come to Verizon this year (as is rumored) that may drive another round of losses for T-Mobile and Sprint in particular, which has had a harder time of retention. And even though the strategy has not paid big dividends to date, Sprint may be compelled to put more price distance between itself and its competitors. Recently, for example, it opened up the Boost $50 unlimited plan to the Sprint CDMA network.

As a consumer I'd welcome a full-blown price war; but the carriers don't want it obviously. They want to get rid of unlimited pricing entirely.