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T-Mobile Disrupts Norms but Delights Customers

April 20, 2014 | About:

In many ways T-Mobile (NASDAQ:TMUS) are the revolutionaries of the US Telecom space. Ever since charismatic CEO John Legere took over the reins of the then beleaguered Company, the fortunes have turned. While the company is trying hard to change the bureaucratic and high margin driven strategies of the bigger players, one might easily mistake T-Mobile to be a non-profit organisation, given the series of announcements that have been made that clearly seems to have put the interests of the American Customers before anything else.

The “Uncarrier” Revolution

CEO John Legere is determined to make his “Uncarrier” Strategy change the entire dynamics of this industry. It started off with the offer to relieve customers from the shackles of the long entrenched bigger players by buying out their contracts and introducing cheaper calling plans. Doing away with Smartphone subsidies and shared data plans with hard caps have already made T-Mobile very popular and a perfect disrupter for the industry. Margins though, have taken a huge hit which continues to worry investors

Interestingly, the share of new subscribers for both AT&T (NYSE:T) and Verizon (NYSE:VZ) has been flat compared to last quarter. T-Mobile on the other hand, has grown from 13% to 15% during the same period.

End of an Era

In a latest move that has caught the industry by surprise T-Mobile has announced the end of Overage fees for its customers. Starting May, T-Mobile customers can enjoy unlimited Voice, Data and texts for most of the plans. The only catch being that customers would be shifted to lower download speeds once they use up their data. There is also the option to go to T-Mobile’s website and purchase additional high-speed data at $10 per 2 gigabytes.

During the announcement, Legere said "We're trying to get millions of Americans to flip the bird on this insanity" AT&T for example, charges in multiples of $20 when its customers exceed the data plan, for which ultimately the customers end up paying 44% as a result of over usage.

T-Mobile has also setup a petition on Change.org, to push the other mobile carriers to do away with overage charges.

This followed last week’s announcement of chopping the cost of T-Mobile’s entry level plan to $40 a month and giving tablet customers up to 1.2 gigabytes of data free per month. There is also a considerable amount of anticipation over the announcement of “Uncarrier 5” by Legere which according to speculation may signal the end of smart phones being carrier locked or branded. While Verizon and AT&T are sure to come up with strategies to counter these measures soon, for now no one seems to have an answer.

Concluding Thoughts

Many will argue that T-Mobile are too small to compete with the bigger players and will not be able to sustain the price wars it has started. A merger with Sprint (NYSE:S) would actually have been a great result for the Customers and investors with Legere being the CEO. However, with the possibility of the merger looking bleak, there is a ray of hope with the upcoming Spectrum Auction in May 2015. FCC has clearly indicated that it would not allow AT&T and Verizon to bully the smaller players in the crucial low frequency auction that is tipped to be a game changer for the industry. What makes it even more special is that there might not be another such auction in many years to come. If T-Mobile can get a much needed breather in terms of Spectrum during this auction, it can take its Disruption dynamics to a whole new level altogether!

About the author:

The author holds a Management Degree in Finance and provides deep insights primarily in the fields of Telecom,Automobile,Technology and retail

Rating: 4.5/5 (2 votes)



Bperez2332 - 3 years ago    Report SPAM

im excited to see tmobile up its spectrum but it already has great and reliable service i have yet to use is service wuile traveling in the us but thats going to change soon when i start this coming july :) but altogether tmobile is doing a examplary job in making sure thats its customers are happy

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