T-Mobile is upping the ante as it targets the home internet market, with a price cut on its fixed wireless Home Internet service that drops the cost to $50 per month with autopay.
That’s $10 less than the original charge of $60 per month and T-Mobile promises no additional fees, annual contracts or data caps, as it looks to challenge incumbent wireline and cable broadband providers.
T-Mobile called out landline ISPs (and cable company Charter in particular) for charging customers fees for installation, activation, modem and Wi-Fi routers, and overage and disconnect fees – saying the total tally reached more than $9 billion in 2020.
The mobile carrier has made clear it wants to move in on cable and wireline internet providers, utilizing network capacity to offer its 4G LTE and 5G FWA home internet. T-Mobile mails a gateway to customers, which is self-installable and according to the carrier takes 15 minutes to connect.
Since moving out of the pilot phase with an official launch in April, FWA home internet from T-Mobile is currently available to 30 million households in roughly 600 towns and cities. While still a fledgling service, within five years it expects to have 7-8 million home internet customers.
To William Ho, principal at 556 Ventures, the move has a few implications, including on T-Mobile’s projection in March of 500,000 home internet subscribers.
“A $10 price cut grabs attention and helps fuel their Home Internet uptake to get to the 500K target,” Ho told Fierce. “Given T-Mobile’s track record of overdelivering on guidance and projections, the price cut or promotion can help.”
He said the low price compared to relatively high pricing from competitors in the space can make up for any speed differences and acts as an anti-churn factor. Some cable operators offer up to gigabit speed service tiers, while T-Mobile’s internet service claims average speeds above 100 Mbps, with typical downloads between 35-115 Mbps. The autopay requirement is another carrier technique to lower churn, Ho noted. (T-Mobile’s FWA service is $5 more, or $55 per month, without autopay).
Small towns and locations with only one option for internet service are some of the places T-Mobile is seeking to make a mark with new or expanded presence. However, it’s not the only carrier with FWA home internet ambitions.
The same week as the price cut, mobile competitor Verizon announced its own 5G Home product is now available in three new cities (Birmingham, Alabama; Fort Wayne, Indiana; and Oklahoma City, Oklahoma) for a total of 60.
At a March investor day T-Mobile highlighted the expanded addressable market opportunity it's going after with annual home broadband industry revenues of $90 billion. Ho sees T-Mobile’s price cut as further confirmation that home internet is a viable growth play for carriers.
“This competitive move and Verizon’s fixed wireless home internet moves validates that there is a growth opportunity against incumbent fixed line providers” like cable operators or ILECs, Ho said.
Verizon is targeting more densely populated areas, as its 5G Home rollout largely aligns with 5G mobility service using mmWave spectrum (now live in parts of 87 cities). Mid-band C-band spectrum will be added to its "5G Ultra Wideband" service once that’s deployed starting later this year.
Verizon’s 5G fixed wireless costs $70 per month but can be as low as $50 per month for people who also buy certain mobile service plans (check out a review of Verizon’s 5G Home service from Fierce contributor Sue Marek here). To help incentivize new signups, in April the carrier started offering $500 to cover early termination fees for customers that switch from other internet providers. Verizon aims to reach 15 million homes with fixed wireless by the end of 2021, and nearly 30 million by 2023.
Meanwhile, T-Mobile is looking to gain ground in underserved and rural markets, something likely baked into their financial guidance Ho noted – but it’s not an either or move for mobile and home internet.
“A bigger play is to bundle customers with both mobile and home internet in those areas, effectively porting out fixed and mobile competitors,” Ho said.
In T-Mobile’s announcement this week, the company also said new and existing customers that activate a Home Internet account can get 50% off a new mobile hotspot line.
Deepening customer relationships by playing both the mobile and home internet provider role is part of cable’s playbook as well, with companies like Charter and Comcast offering mobile service via their MVNO brands to broadband customers.