T-Mobile USA sets its own course as 'un-carrier'

Wednesday 27 March 2013 | 15:28 CET | Market Commentary
T-Mobile USA has made a big step forward in its strategy. After its proposed merger with AT&T was blocked by regulators, the mobile operator is moving ahead with its own plans. It's helped by the spectrum and break-up fee it received from the AT&T deal. The planned merger with MetroPCS will also provide a boost, making the number four on the US mobile market (after AT&T, Verizon and Sprint) a good bit stronger. 
The company has announced a few major milestones:
  • The difference in prepaid and postpaid plans is abandoned with the new Simple Choice offering. Customers will be able to cancel the plan with a month's notice. Handset subsidies have also been dropped and replaced with direct or installment sales.
  • All the plans offer unlimited SMS and voice. Data is available in three options: 500 MB (USD 50 per month), 2.5 GB (USD 60) or unlimited (USD 70). Customers can of course also use Wi-Fi.
  • Overage fees (outside the bundle) are also a thing of the past. Instead, customers will see speeds reduced (to 2G) after using up their allowance, or they can buy another bundle of data (2GB for USD 10).
  • T-Mobile USA is also starting sales of the iPhone 5 (with LTE access).
  • The carrier is launching its own LTE network, using the 1,700 MHz band.
T-Mobile USA is looking to differentiate itself from the competition by focusing on transparency and simplicity, with the motto 'the un-carrier'. The focus is on data, with traditional services (voice, SMS) seemingly given away free. The end to out-of-bundle fees, detested by consumers in the US, is a good step. The costs for extra data are also low, at just USD 5 per GB (in comparison, Vodafone Red in the Netherlands charges EUR 0.10 per MB, equal to EUR 100 per GB or EUR 2 for a bundle of 50 MB, the equivalent of EUR 40 per GB). With the launch of the iPhone and LTE, the operator is also narrowing the gap further with the competition.

For T-Mobile's sister companies in Europe, this is an important moment, especially the countries where Deutsche Telekom has a mobile-only strategy, namely the UK, Netherlands, Austria, Poland, Albania. This new strategy can very possibly be replicated in Europe.

There is a strong likelihood this will happen in the Netherlands. T-Mobile has 1800MHz spectrum there, and it's competitors are already dropping handset subsidies. Deutsche Telekom has already said the Dutch subsidiary will position itself as an "unconventional challenger", and the above ingredients can make that a reality. Its fixed broadband unit Online.nl changes little in this, as Online can focus on Wi-Fi and VoIP apps, similar to the SmartTalk app from BT. T-Mobile can also position LTE as a replacement service for DSL. If both units of the Dutch subsidiary are allowed to compete freely with each other, the value of both will only be further maximised.

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