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(Corrects price of Verizon's 4 gigabyte monthly plan in 9thparagraph to $110 from $70)
NEW YORK, March 25 (Reuters) - T-Mobile USA is ditchingphone subsidies under a new set of service plans, hoping todifferentiate its offerings from bigger rivals by promisingcustomers more flexibility.
The No. 4 U.S. mobile network operator, owned by DeutscheTelekom, hopes to regain ground after heavy customerlosses to rivals such as Verizon Wireless and AT&T Inc inrecent years. T-Mobile USA is proposing to merge with itssmaller rival MetroPCS Communications,
While its bigger rivals tie customers into two-yearcontracts in exchange for discounts on smartphones, T-Mobile isdoing away with the device discounts and telling customers theydon't need to commit to a contract.
Instead, customers can pay for their phone over time inmonthly payments that are separate to their service fees.
But even with the monthly phone payments, BTIG analystWalter Piecyk said, T-Mobile customers would still pay less thanat AT&T or Verizon Wireless. The biggest discount would be forcustomers who keep their phones longer than two years or handdown a device to another family member.
"This could be an effective way for T-Mobile to reinvigorateits efforts to brand itself as the low-priced option in themarket," Piecyk said in a research blog.
Executives at AT&T and Verizon have said they could followT-Mobile's footsteps if its new options prove popular withconsumers. But many consumers may prefer the more traditionalmodel, according to some analysts. [ID: nL1E8N7FXJ]
The plans, which were on the company's website on Mondayahead of a Tuesday press event, start at 500 megabytes of datadownloads and unlimited talk time and text messaging for $50 andincrease to $60 a month for 2.5 gigabytes of data or $70 a monthfor unlimited data usage.
Verizon wireless charges $90 for 1 gigabyte of data andoffers 4 gigabytes for $110 and AT&T charges $95 a month for 1gigabyte of data and $110 for 4 gigabytes of data.
On its website T-Mobile USA shows that it is clearly goingafter AT&T customers by comparing its pricing directly to pricesat the No. 2 U.S. mobile provider.
T-Mobile USA customers who already have a phone wouldbenefit from the lower service prices would benefit most fromthe new offerings but those buying a new phone would have to paya monthly fee for the phone.
For example, its starting price for a Samsung Electronics Co Galaxy S III is $69.99 and $20 a month for twoyears, which adds up to $549.99.
In comparison Verizon Wireless and AT&T charge $200 for thesame price to customers who sign a two-year contract.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc. (Reporting By Sinead Carew; Editing by David Gregorio)
