Author(s): Kester Mann
T-Mobile US recently announced the latest steps in its Un-carrier strategy. These were less radical than previous iterations, but the focus on driving higher data usage and showcasing improved network quality reflects the impressive turnaround the company has made.
In summary, Un-carrier "5.0" and "6.0" offer the following:
- A free, seven-day Test Drive on the T-Mobile network using the iPhone 5s
- A zero-rated music-streaming service for customers on limited data plans
- The launch of UnRadio, a service in partnership with Rhapsody that includes features such as ad-free listening and the ability to mark songs as favourites
The principal motivation behind Test Drive is to overcome a perception of inferior network quality. T-Mobile was the last of the big four US carriers to launch LTE, but it has since made impressive progress, thanks in part to improved access to spectrum. T-Mobile said that, in unveiling Test Drive, it is expanding its Wideband LTE service to a total of 16 markets and has already brought voice-over-LTE (VoLTE) coverage to 100 million people. Opening the network to the scrutiny of US consumers is a statement of the carrier's confidence in its performance and reliability, as many participants are likely to be customers of Verizon Wireless or AT&T.
T-Mobile should be applauded for reaching a deal with Apple for the Test Drive initiative — a lower-spec device would not have offered a similar incentive for consumers to take part. There is some irony that it was the carrier's failure to offer the iconic iPhone until as recently as last year that led to significant customer losses and part-motivated the Un-carrier strategy in the first place. T-Mobile estimates that about 1 million people will participate in Test Drive over the next 12 months.
The concept of Test Drive is nothing new. Vodafone in the UK has been offering its own version since 2011 to help customers better understand data charging — subscribers can use as much mobile Internet as they like for three months and then pick the service plan most suited to their browsing habits. Vodafone said that the first participants used 20 percent more data on average than they did before the trial.
T-Mobile's music streaming offer is a clever initiative that should boost customer sign-ups and help to keep down churn. It's low risk, because music doesn't strain networks in the same way that video services such as YouTube do, meaning that T-Mobile can strengthen its pro-consumer reputation with minimum investment. However, one possible side-effect is that T-Mobile could upset advocates of net neutrality in giving preferential treatment to music over other forms of data.
T-Mobile's latest initiatives should further strengthen the company's improving brand image. The carrier continues to successfully promote itself through the Web and social media, avoiding significant marketing investment. Should Sprint's attempt to buy the fourth-placed carrier succeed, my view is that it should maintain the T-Mobile name. Having now carved a reputation as innovative and consumer-friendly, additional investment from Softbank could create a formidable challenger to rival Verizon and AT&T.