In a blog last week, T-Mobile CEO Mike Sievert celebrated 10 years of the “un-carrier” strategy, taking credit for 20+ “un-carrier” moves and some big pro-consumer changes in the wireless industry.
That invited questions about whether T-Mobile is still living up to its “un-carrier” reputation and what it might do to remain in that position.
One of the more memorable “un-carrier” announcements in recent memory is the one where T-Mobile said it was sticking it to big cable by bringing its un-carrier strategy to broadband via its fixed wireless access (FWA) offering.
Bill Ho, principal analyst at 556 Ventures, also pointed to last summer’s Coverage Beyond, a package that included free in-flight Wi-Fi and international roaming at a time when many people were returning to travel after the Covid pandemic.
The offer includes 5 GB of free high-speed data worldwide in more than 210 countries and destinations. “I thought that was pretty good,” Ho said, noting that later in 2022, T-Mobile rolled out the magenta suitcase to remind everyone about the Coverage Beyond deals.
Ho said T-Mobile has managed to change the industry, forcing its rivals to eliminate data buckets and go the unlimited route, for example.
“They’ve done good stuff, and they’ve changed the market,” such as with no contracts, “but we all now know, the contract is now in the phone instead of in the price plan,” he quipped, referring to device installment payment plans.
Last week, Verizon announced it’s offering new, eligible home internet customers on 5G Home, LTE Home Internet or Fios the choice between two options: up to $200 in Home Depot gift cards or an Xbox Series S, along with Xbox accessories. It's somewhat reminiscent of T-Mobile’s Shell gas discounts.
“It’s uncharacteristic of the Verizon of old,” Ho said, referring to the Home Depot offer. “There’s a realization they can’t rest on their past laurels, and the marketing of old won’t cut it for the new,” especially in recent quarters where they’re underperforming at the same time T-Mobile is surging in branding and marketing, he said.
Clearly, even though AT&T is part of the “dumb and dumber” phrase that former T-Mobile CEO John Legere was fond of using, there’s always been a special place for Verizon. “They always went after Verizon even though AT&T was there. Why? Because Verizon had the biggest postpaid base. It’s where the low hanging fruit’s at,” Ho said. With its acceleration of 5G and other network upgrades, T-Mobile is now able to say “hey, we’re the new network sheriff in town,” he said.
Impact of Sprint merger
According to Sievert, one of the most important moves of all happened three years ago when T-Mobile combined with Sprint, which shook up the decades-old choice between the best value and the best network.
IDC analyst Jason Leigh, who recently completed a report analyzing the T-Mobile/Sprint merger, said the success of T-Mobile/Sprint is remarkable in what it has achieved in a relatively short period of time. (Importantly, he did not analyze the merger’s effect on jobs, which Geek Wire covered last week, or customer service, where Bloomberg chronicled problems after the merger.)
T-Mobile did not pay for Leigh’s study; it did pay for a web link to the finished report, which is usually behind a paywall. But that’s the extent of it. “I sat down and said ‘What’s working and what’s not working?,’” Leigh said. “It’s difficult at this stage to find fault with what they’ve accomplished so far.”
In fact, the T-Mobile/Sprint deal stacks up well compared to other telecom mergers over the past 20 or so years, he said. With a lot of other deals, the companies barely had their ducks in a row after three years, let alone actually serving customers on one billing system.
“I think the fact that T-Mobile has migrated the vast majority if not all of the Sprint customers over to the T-Mobile network alone in three years is a pretty fantastic achievement on its own,” he said. “Any of that backend consolidation takes a tremendous amount of time.”
One thing that probably helped T-Mobile is it’s a pure play wireless company. It divested the wireline business that came with Sprint and didn’t try to blend a wireless and wired network together. It’s unclear if anything like that will change given its current dalliances with fiber.
Leigh said he’d like to see T-Mobile share more about its rural connectivity performance beyond just the amount of population covered. Among the regulatory commitments that came with the Sprint merger is within six years of the merger, it needs to ensure that two-thirds of rural areas receive mobile service of at least 100 Mbps and 90% of rural areas have access to mobile service of at least 50 Mbps. It might be reasonable to assume, based on tests by firms like Ookla, that T-Mobile’s on pace to deliver that in rural areas, but he’d like to see more data on that from T-Mobile.
Perception & reality
Asked if T-Mobile is losing its “un-carrier” mojo, Recon Analytics founder Roger Entner said that’s not happening. “I think the pace of ‘un-carrier’ moves has certainly slowed down a lot,” he said. “The un-carrier FWA is certainly disrupting the fixed market in a big way.”
The last carrier who disrupted in a significant way was AT&T with its strategy of treating both new and existing customers the same way, he said.
However, T-Mobile is still viewed as the value leader, even though it has higher ARPU than Verizon, he said. And even though T-Mobile boasts great network achievements, people buy on perception. Over time, perception catches up to reality and that takes roughly a year, he said.
AT&T and Verizon raised prices last year, but that was on certain legacy plans. Entner characterized that as akin to charging $2 more to a segment that doesn’t care as much about what they’re paying.
Two-thirds of Verizon’s customers are with them for more than five years, he said. T-Mobile is adding far more new customers, but only 39% of T-Mobile’s customers have been with the “un-carrier” for more than five years, according to Recon data. “They’re fighting for the switcher pool,” he said.
As for what T-Mobile can do to keep its “un-carrier” moves alive, Ho said it can continue to do things that Verizon and AT&T, being premium carriers, don’t want to do and perhaps force more changes like it did with data overage charges.
“They’re gaining traction. It’s the whole value prop of why you want to go to T-Mobile,” he said. “What they can continue to do in the future is add partners to that value proposition,” whether it’s T-Mobile Tuesdays or something along the lines of AAA and Netflix.
Entner said he interpreted Sievert’s April 10 blog as more of a nostalgic victory lap rather than a rallying cry for what’s to come. After all, it could have thrown down the gauntlet in a much more confrontational way with cable, which right now is the biggest beneficiary of T-Mobile not getting access to the 2.5 GHz spectrum that it bought at auction, he said.
The next round of earnings will provide some clues as to how well each of the carriers are executing on their strategies. AT&T reports first-quarter earnings on Thursday, with Verizon reporting on April 25. T-Mobile reports results on April 27.