Sprint Ups Monthly Data Plan Price

NEW YORK ( TheStreet) -- Sprint ( S) announced Tuesday it had added a $10 monthly charge to new smartphone users for unlimited data, a move that analysts say is positive for the carrier.

Under the new plan, effective Jan. 30, the third-largest U.S. wireless carrier will charge $79.99 for unlimited data, texting and phone calls to mobile lines.
Sprint

The charge is an indication of strong data demand the company is seeing from its users who are increasingly buying smartphones and using data-heavy applications, said Michael Nelson, an analyst at Mizuho Securities.

Last quarter, Sprint reported the highest total number of new wireless subscribers in four years, thanks to sales of smartphones like the Samsung Epic 4GTM and the HTC EVO 4G.

But while other carriers like AT&T ( T) have moved toward tiered data pricing models to capitalize on growth in data demand, Sprint has taken a different approach by not capping data usage or charging on a usage- based model.

"One of the signals Sprint is sending to its competitors is that it plans on maintaining its unlimited usage model," Nelson said.

Sprint's decision to raise prices in the wake of Verizon's iPhone's launch also signals confidence in its data pricing model and that consumers value unlimited so much that they are willing to pay more for it, Credit Suisse analyst Jonathan Chaplin wrote in a recent note.

Sprint said that the price increase was necessary to deal with increased traffic on its mobile network, as smartphone customers use 10 times more data than traditional cellphone users do.

Analysts expect other carriers to raise rates or set data limits for smartphone users if they haven't done so already.

AT&T was the first carrier to make the shift to tiered pricing last summer to deal with a surge in data usage from iPhone users.

Verizon ( VZ) tried tiered pricing as part of a holiday promotion in Dec. 2010, and the company has said it is considering various pricing options going forward, though plans have yet to be announced.

T-Mobile in October began reducing data speeds once subscribers exceed 5GB of data usage in a billing cycle and last week Virgin Mobile announced a similar plan.

Sprint shares closed down 2.02% to $4.36 Tuesday.

--Written by Olivia Oran in New York.

>To follow the writer on Twitter, go to http://twitter.com/Ozoran.

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