Could “Unlimited” Save T-Mobile USA?

Jan 30, 2012
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Could “Unlimited” Save T-Mobile USA?

T-Mobile USA has a problem: uninterested subscribers, patchy "4G" coverage and, with the collapse of the AT&T acquisition deal, sole responsibility for digging itself out of the whole mess. The carrier - or more accurately owners Deutsche Telekom - had envisaged AT&T taking over responsibility for US operations, leaving the German parent company to handle the European market it's far more familiar with. Those schemes have been left in disarray, but could T-Mobile's UK cousin have shown it the way to shock-style market salvation?

Deutsche Telekom scaled back investment in its network - as well as negotiations on new device exclusives and the like - when the AT&T deal looked like it would go ahead. With those plans in tatters, the carrier has been left playing catch-up. AT&T will be forced to hand over a $1bn chunk of AWS spectrum, but T-Mobile USA still has to invest in actually building out a usable network, something expects believe will cost three times the $3bn AT&T has also coughed up.

That demands monthly revenue, and that means subscribers, something T-Mobile USA is having trouble with. AT&T and Verizon have cornered the market in top-tier devices, as well as LTE options, and T-Mobile still misses out on the iPhone unlike the other three big US carriers.

Earlier today, T-Mobile UK announced what was described as "a UK first": true unlimited talk, text and data. The new "Full Monty" packages do away with the fair-use policies and caps that have proliferated in the past few years, bundling everything - including tethering - into a single monthly payment. £41 ($64) each month for two years gets you zero caps along with a choice of recent smartphones including Android handsets and Apple's iPhone for no upfront fee.

[aquote]T-Mobile UK is counting on potential subscribers keen to escape having to keep track of usage[/aquote]

£41, for the UK, is a relatively expensive tariff. You can, in fact, get capped data packages with unlimited texts and/or calls for around half that amount, and still be handed a "free" smartphone upfront. T-Mobile UK is counting on potential subscribers keen to escape one of the worst headaches of the current mobile experience: having to keep track of usage. Those users will pay for the privilege of ignoring the call, message or data counter on their device.

It's possible T-Mobile UK will be completely overwhelmed, surprised by how many people are looking for truly unlimited data, and see its network crumble under the deluge. The carrier has at least tried to provide ways of offsetting data from its HSPA+ frequencies (like with T-Mobile USA, there's no LTE for the UK network): a WiFi deal with a nationwide hotspot provider promises to automatically shunt browsing onto a nearby wireless network, thanks to a free log-in app for smartphones.

T-Mobile USA has so far concentrated its hefty-contract options on family plans: multiple users being billed in one lump, sharing a pot of minutes, texts and data. That could easily be redressed to suit one, mobile-addicted subscriber pulled in by the lure of "true" unlimited. T-Mo would probably need to ink a hotspot deal or two to stop its spectrum being entirely bogged down, but that would likely be a whole lot easier - and quicker - than installing the AWS base stations required to make use of the airwaves it grabbed from AT&T.

Perception is everything. AT&T is expected to launch the Nokia Lumia 900 at $99.99 and, because it's under $100 upfront, stand out from the rest of the market even though - over the course of the two year agreement - that hundred bucks difference from the raft of Android smartphones and the iPhone is little more than a drop in the subscription ocean. T-Mobile USA needs to use that same approach to its own advantage: wow potential subscribers with "free" devices - and not the usual year-old dross - and eye-catching "true" unlimited deals and use that predictable monthly revenue to pacify investors and fund the all-important network build out.


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