Telstra Corporation Ltd (ASX: TLS) is Australia’s largest telecommunications business and has just announced a new unlimited mobile plan to fend off competition and falling margins.

Telstra has announced a $199 per month unlimited plan that comes with truly unlimited data and it doesn’t throttle download speeds once users reach a certain limit.

This could be great news for people who use their phones as the internet hotspot for the home internet if they don’t want to get an NBN connection.

A Value Proposition?

I have seen various reports of people being charged hundreds of dollars because they went over their data cap and were charged for excess data. That’s despite the large increases we’ve already seen to the data allowances of most mobile plans.

As CEO Andrew Penn said in May, “We are seeing data volumes increase 50% per annum across both fixed and mobile networks and the range of services supported by our networks increase dramatically.”

Fix A Falling Telstra Share Price

Source: Google Finance.

Telstra’s move could lead to rivals like Optus, VodafoneAmaysim Australia Ltd (ASX: AYS) and TPG Telecom Ltd (ASX: TPM) all coming out with cheaper packages over time.

Having successfully grown in broadband and following its decision to build its own 5G mobile networks around major Australian cities, TPG is pushing aggressively into mobile.

Earlier this year, TPG announced it would offer customers a free six-month plan with unlimited data (although speeds would be capped). After that, customers would be charged just $9.99 per month.

Online retailer Ltd (ASX: KGN) is also offering cheap plans via its partnership with Vodafone.

Next Moves Are Critical

Telstra’s move is undoubtedly a good one for consumers and will likely foster competition, but Telstra has now set a ceiling on the price of the ultimate phone plan.

Investors will be hoping Telstra’s larger and efficient networks can enable it to keep its pricing power and maintain its control over the lion’s share of mobile subscribers across the country.

The Telstra share price has fallen by 0.9% in trade so far today.