T-Mobile Dropping Membership in ‘Wireless Carrier Club,’ CEO Says
T-Mobile USA is “canceling our membership to the Wireless Carrier Club,” T-Mobile CEO John Legere said at a press conference Tuesday, saying the carrier will begin selling the iPhone 5 on April 12 and start a series of other steps to brand T-Mobile as the “Un-carrier.” T-Mobile said it will be selling the iPhone 5 for $99.99, plus a monthly $20 fee over the course of two years. The carrier will offer the iPhone 4S for $69.99 plus a $20-per-month fee over two years, and the iPhone 4 for $14.99 and a $15-per-month fee over two years. The fee is in addition to the cost of a customer’s voice, text and data plan. T-Mobile said it will offer other new smartphones on similar fee schedules (http://t-mo.co/ZqQaqh).
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T-Mobile’s iPhone announcement occurred in conjunction with publicity for its no-contract “Simple Choice Plan,” which it began offering Sunday. The base $50-per-month plan gives customers unlimited voice and text, along with 500 MB of data use per month. Customers can upgrade to 2 GB of data per month for an additional $10 per month, or to unlimited data for an additional $20 per month, T-Mobile said. A second line can be added to the plan for $30 per month, with additional lines costing $10 each per month. T-Mobile argues its no-contract approach allows customers to “purchase great devices, pay for them in affordable, interest-free monthly installments, and upgrade anytime they like -- not just when their carrier says it’s okay” (http://t-mo.co/YCmw1U).
The carrier also said it has deployed its 4G LTE network in its first seven cities -- Baltimore; Houston; Kansas City; Las Vegas; Phoenix; San Jose, Calif.; and Washington. T-Mobile said it expects its LTE network will be available to a potential 100 million customers by the middle of the year, and 200 million potential customers by the end of the year. By contrast, No. 1 U.S. wireless carrier Verizon Wireless’s 4G LTE network is now in 400 U.S. markets, while AT&T’s network covers 50 markets. Sprint Nextel said it expects to have its network available in 19 markets by September.
T-Mobile’s announcement Tuesday was not unexpected, but does represent the “first shot across the bow that T-Mobile is attempting to reinvigorate its brand and position itself as THE simplified wireless carrier,” Wells Fargo analyst Jennifer Fritzsche said Tuesday in an email to investors.
The “Un-carrier” strategy is a “bold and long-overdue attempt to revive its fortunes by clearly differentiating itself from other major U.S. mobile operators” on smartphone costs and services, and by closing the gap between it and the other top carriers on device availability and availability of a 4G network, said Mike Roberts, principal Americas analyst for Informa Telecoms & Media, in an email to clients. While T-Mobile has stressed the simplicity and freedom of its Simple Choice plan, it must also “educate postpaid customers on the need to pay for devices as well as services,” Roberts said. While T-Mobile’s strategy “is not without risks, it could help T-Mobile reverse its sliding market share, which stood at 9.6 [percent] at end-2012, behind Sprint with 16.1 [percent], AT&T with 31.2 [percent] and Verizon Wireless with 33.5 [percent], based on Informa data,” he said. “T-Mobile’s share will increase to 12.2 [percent] after it closes the acquisition of MetroPCS, which is more likely now that the deal has received regulatory approvals.”