T-Mobile brings Un-Carrier to work

T-Mobile today announced its first Un-Carrier moves targeted towards businesses. The below comment can be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan can also be reached at jan@jackdawresearch.com or (408) 744-6244.

T-Mobile’s first business effort with Un-Carrier is a logical next step in its strategy, since businesses have many of the same pain points as consumers. T-Mobile’s move towards transparency in pricing should help customers on other carriers figure out more easily whether it’s worth making the switch. It doesn’t enable true comparison shopping because the other carriers still do custom, negotiated pricing for business customers. But with most business customers currently on other carriers, that may not be so important. T-Mobile’s new business offerings should be very popular with smaller businesses, which buy services very much like consumers, with the buyers being office managers or business owners rather than professional IT directors. However, for larger businesses, rate plans are just part of the picture, and other features like mobile device management, other communications and productivity applications and wireline services will be part of the picture too, and T-Mobile can’t address any of those today. Device pooling will be popular with businesses too, though T-Mobile only offers three tiers, and this may not give most businesses enough flexibility to pick the right plan and have predictable bills each month.

T-Mobile’s extension of Contract Freedom into device payments will make customer acquisition even more expensive, but is an important additional step given how many customers are now on device payment plans with the other carriers. The trade-in of devices will help offset some of this cost, however. Locking in pricing for life will help counter some of T-Mobile’s competitors’ criticisms of disappearing promotional pricing.

Overall, T-Mobile’s new moves will help keep the momentum going around its growth and its success in getting subscribers to switch from competitors. It’s continuing to bank on the fact that adding new customers in this way will pay off long term, because these subscribers will stick around. Though there’s a risk that it attracts the most price-sensitive customers, and these customers will be more likely to switch carriers again in future, T-Mobile tells me that’s not what’s happening, and that these new customers are at least as loyal as the rest of its base. Its churn is falling over time, which lends some credence to that claim. I’ve been concerned that T-Mobile was running out of obvious levers to drive continued rapid consumer growth, but moving into business opens up a huge new opportunity for T-Mobile to continue that growth, especially because its market share of the business market is so small today.

Posted in Media comments.