T-Mobile is saying goodbye to the data plan

T-Mobile is ditching the data plan for an unlimited model that they hope will change how people use data — and draw customers away from competitors like Verizon and AT&T.

The company announced Thursday the launch of T-Mobile ONE, a cell phone plan it says has no limits on data. Subscribers pay $70 a month for the first line, $50 for the second and $20 a month for additional lines.

The wireless provider already offers an unlimited data plan, but unlimited data is for an added price on top of the traditional cell phone plan. This plan instead incorporates unlimited data into the base price, and will be the only option for new customers.

"We are completely destroying the whole concept of the data plan. It's gone," T-Mobile CEO John Legere said in his video announcement.

Comparatively, Verizon offers five different size data plans ranging from 2GB for $35 to 24GB for $110 a month.

Previously, T-Mobile has offered four different size data plans, including its unlimited plan.

The T-Mobile ONE plan represents a big shift in how wireless companies approach data. Since Legere took over the company in 2012, T-Mobile has made an aggressive play for customers from the bigger wireless companies, Verizon and AT&T. Thursday's announcement called out both networks.

T-Mobile claims that Verizon and AT&T couldn't offer a totally unlimited plan because their networks are too outdated and overcrowded.

"Their networks are old. They built them with last generation technology for how people used phones back then — just for phone calls," Legere said.

But not everyone is excited by T-Mobile's new approach to data. The Simple Choice Unlimited plan T-Mobile already offers is $95, with a $10 monthly discount for adding a tablet and phone line. Some customers claim it works out to a better deal than the new option.

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Plus, data through T-Mobile ONE isn't completely unlimited. Video streaming is limited to standard definition unless customers pay an additional $25 a month for access to high definition. Customers using more than 26GB of data a month have their traffic prioritized behind other users during high network demand after crossing a billing threshold. Tethering — or turning on a wifi hotspot — is capped at a 2G speed.

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Analysts say that the new plan arrives as T-Mobile is combating slowing growth in new customers. But the starting price for new customers is now $20 higher than the cheapest plan previously available.

"T-Mobile is having less and less success with adding new customers and winning subscribers from competitors as time goes on, as its various Un-Carrier moves offer diminishing returns," analyst Jan Dawson wrote on Medium.

Still, T-Mobile expects this plan to increase customer loyalty and pointed out in its release that the plans were taken into account for its guidance in its July 27 earnings call.

The T-Mobile ONE plan will take effect September 6.

"Who knows? Maybe there will be some cool new phones in September," Legere said.