T-Mobile said to be 'comfortable' with unlimited pricing as network strengthens, refarming continues

T-Mobile US executives are content with T-Mobile's current pricetag for unlimited talking, texting and data, partially as a result of the carrier's continued efforts to expand and improve its wireless network. Indeed, only 50 percent of T-Mobile's spectrum is currently used for LTE service -- meaning T-Mobile still has a significant amount of spectrum it can refarm for LTE.

The insights into T-Mobile's business and network situation come from financial analyst firm Jefferies, which recently met with T-Mobile management following the release of the carrier's earnings.

"While pricing remains very competitive, management is very comfortable with its current position and does not view itself as a price discounter," the Jefferies analysts noted. "Uncarrier moves rarely touch pricing and the company is comfortable with its unlimited pricing, particularly as the network strengthens."

T-Mobile raised the price of its unlimited data service from $80 to $95 per month for an individual in November. That $95 price slides down though depending on how many people sign up for service on an account.

T-Mobile executives also briefly addressed the topic of the carrier's unlimited data service during T-Mobile's recent earnings conference call. COO Michael Sievert said the carrier continues to offer unlimited pricing options, but he noted those aren't as compelling thanks to the operator's Binge On and Music Freedom programs that zero-rate the data from select streaming video and music providers.

"We're really proud to be able to offer unlimited," Sievert said during the call, according to a Seeking Alpha transcript of the event. "We've got the network that has the capacity and we don't have any plans to change the fact that we offer unlimited. And by the way, keep in mind that offering unlimited has become much more network efficient since the launch of Binge On because the vast majority of our unlimited customers keep their Binge On control activated for a number of reasons, including the speed and reliability of the rest of their data. So that makes delivery of unlimited to those customers much more network efficient for us than it's ever been before."

Also on the carrier's call, T-Mobile's CTO Neville Ray explained that Binge On itself reduces overall traffic on T-Mobile's network by 10 percent, due to the lower-resolution video the carrier streams to its users.

The Jefferies analysts also noted that T-Mobile has a number of technological options to increase the capacity of its network, thereby supporting unlimited customers' traffic.

"Nearly 50% of [T-Mobile's] spectrum is not allocated to LTE, presenting a major refarming opportunity over the next couple of years," they wrote. "Deployment of 700MHz has moved more quickly than the company anticipated and more than 50mn licensed POPs remain to be deployed. Similarly, management is moving aggressively to deploy AWS-3 spectrum within the next year, though handsets are unlikely before 2017. … On the technology front, 4x4 MIMO and carrier aggregation are tools to improve capacity."

On the carrier's earnings call, T-Mobile's Ray explained that the carrier plans to retain "maybe half a dozen channels" of its network for GSM services targeting the M2M and IoT space, but that the bulk of its existing 1900 MHz GSM network will be refarmed for LTE service. When questioned about the timeframe for that refarming, Ray said: "I'm hopeful we'll come in long before 2020."

Related articles:
T-Mobile, Comcast, tower firms could benefit from auction's spectrum scope, but challenges remain
FCC moves forward with special access reforms, marking a win for T-Mobile and Sprint
T-Mobile's 'blow-out:' 2.2M new customers and 10.6% revenue growth in Q1

Article updated May 5 to clarify T-Mobile's GSM network plans and its unlimited price points.

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