T-Mobile today announced Smartphone Equality, a policy change which will allow the many customers who don’t have prime credit to nonetheless qualify for smartphone installment plans and other deals normally reserved for those with prime credit. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan can also be reached for further comment at (408) 744-6244 or jan@jackdawresearch.com.
When T-Mobile introduced Mobile Money, it was clearly targeted at a segment of the market largely ignored by the major carriers. This segment has lower incomes, poorer credit and often no access to traditional financial services, and T-Mobile demonstrated a willingness to go where other carriers had not. Today’s Smartphone Equality announcements is another example of T-Mobile targeting customers which are largely neglected by the big four carriers, and especially their postpaid services. It should reinforce T-Mobile’s appeal among this segment and help drive loyalty among these customers.
I’ve been concerned by some of T-Mobile’s Un-carrier moves from a business perspective, as they often sacrifice financial performance for short-term pursuit of growth. But Smartphone Equality is an example of a plan which both serves growth objectives while being well grounded in good financial sense. The plan is based on research from T-Mobile into which customers are most likely to pay their bills, and targeted carefully at customers who should present little or no additional risk. This is a smart move from T-Mobile, one that should both benefit customers and the bottom line. Unlike some of T-Mobile’s other moves, it’s not targeted at switchers but rather at existing customers, since a track record of paying bills on time is required to qualify. As such, this should help churn rates rather than simply boosting gross adds, which have been the focus of so much of T-Mobile’s efforts recently.