MetroPCS Unveils $40 Prepaid Mobile

How low can you go?

Very low, according to MetroPCS Communications, which has unveiled a family of prepaid mobile calling plans that begin at $40 a month.

The new plans, announced Tuesday, will pressure MetroPCS earnings, but also pressure the offerings of competitors including Sprint Nextel, which has paced the prepaid market with its Boost Mobile service, which has a $50 monthly plan.

The new MetroPCS Wireless for All plans also bundle taxes and regulatory fees in service prices, eliminating the fluctuating prices that annoy many consumers.

"Wireless for All means we're offering predictable, affordable, and flexible service plans for all consumers with no hidden costs or charges," said Roger Linquist, president, CEO, and chairman of MetroPCS, in a statement. "We're simplifying our service plans and eliminating the guesswork associated with regulator fees and state and local taxes."

Investors, fearing a price war, reacted to the MetroPCS announcement by driving down the firm's stock more than 10%.

The prepaid market has generally been a bright spot in the mobile carrier industry, and the low fees have taken customers away from postpaid offerings. MetroPCS said it added 1.3 million subscribers in calendar year 2009.

MetroPCS said its new family of all-inclusive monthly service plans will carry prices ranging from $40 to $60 a month. All the plans feature unlimited nationwide talk, text, and Web services, the company said.

While mobile phone carriers have been generally lowering prices because of competitive price cuts, they have bolstered their revenue by increasing their charges for texting. The texting increases, however, have incurred the scrutiny of lawmakers. U.S. Senator Herb Kohl, chairman of the Senate Antitrust Subcommittee, has complained about the texting increases and has indicated the issue will be examined.

And, in what could be a harbinger of things to come in texting, a major Indian cellular provider, SMS GupShup, is offering texting for free to its 26 million users, according to press reports from India. Still in its infancy, the GupShup texting service competes with Twitter.