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T-Mobile Lays Down Overage-Fee Challenge

UPDATE! Bellevue, Wash. — T-Mobile threw another challenge at its competitors by ending overage charges on older T-Mobile consumer plans. 4/14/2014 10:25:00 AM Eastern

UPDATE! Bellevue, Wash. — T-Mobile threw another challenge at its competitors by ending overage charges on older T-Mobile consumer plans.

Last year, the company launched Simple Choice plans, which lacked overage charges, as part of its “uncarrier” strategy.

All Simple Choice plans offer unlimited talk and text and 500MB of 4G data at $50/month for a single line, with unlimited data at 128Kbps speeds when the 500MB cap is exceeded, according to T-Mobile’s website.

The company, however, previously offered many plans with a capped amount of 3G/4G data and unlimited data after that at slower speeds. Many of those legacy plans also included unlimited voice and messaging.

The carrier also extended its no-overage strategy with a Simple Starter value plan unveiled last week. The plan positions T-Mobile as the only major U.S. carrier offering a $40 single-line smartphone plan with 4G data and unlimited talk and texting. That plan provides up to 500MB of 4G LTE data and tethering with no data-overage charges. After 500MB of data, data service is suspended unless users get on-demand data passes through My.T-Mobile.com, visiting a T-Mobile store, or calling customer care.

 “Starting in May for bills arriving in June — regardless of whether you're on Simple Choice, Simple Starter or an older plan — we're abolishing overages for good. Period,” said T-Mobile president/CEO Tom Legere.

Under the new strategy for legacy plans, “for anyone on an older plan with a domestic bucket of minutes or texts, they will experience effectively unlimited service as we will no longer charge the overage fees,” a spokesman confirmed. Like before, data downloads exceeding a 3G/4G cap would slow down to 128Kbps, a spokesperson said.

Legere also asked consumers to sign a petition at Change.org to end overage charges, contending that overage penalties from his three competitors hit more than $1 billion every year. "The worst thing about these overage fees is that they're often inflicted on those who can least afford them," added Legere.

Traditional carriers' entry-level plans “lure customers in” with a low monthly fee for a fixed amount of voice minutes, texts and data, but these plans “are purpose-built to drive customers over that invisible line into massive overage charges,” the company said. A person using AT&Ts $45 entry-level plan will pay $125 if he consumes 1.5GB, or the average amount of data used by the average U.S. smartphone user, the company said.