Light Reading

T-Mobile: How Low Can It Go?

Sarah Reedy
LR Mobile News Analysis
Sarah Reedy, Senior Editor
12/21/2011
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T-Mobile US Inc. is getting $4 billion and spectrum as part of its breakup with AT&T Inc. (NYSE: T), but that won't earn it a spot as a real contender for wireless subscribers again. (See AT&T Drops Bid to Acquire T-Mobile and T-Mobile Gets Spectrum in AT&T Breakup.)

Instead, the fourth-largest U.S. carrier, written off by many subscribers in the nine months that the merger attempt has dragged on for, could be planning steep price cuts to regain market share. And, that could have reverberations for the entire industry, according to one analyst.

Mizuho Securities USA Inc. analyst Michael Nelson put forth this theory Tuesday, noting that an independent T-Mobile could lead to incremental pricing competition, since the value provider is losing post-paid market share to the national carriers and pre-paid market share to MetroPCS Inc. (NYSE: PCS) and Leap Wireless International Inc. (Nasdaq: LEAP).

"With the deal now dead, we believe there is increased risk for the industry that T-Mobile may pull the pricing lever and implement disruptive pricing plans in an effort to regain market share," Nelson writes in a research note.

Without the iPhone or a clear path to Long Term Evolution (LTE), T-Mobile has already started down the price-slashing road. Jim Alling, T-Mobile's COO, took to the company's blog to remind consumers about these plans once news of the merger fail broke.

"We’re offering our best plan ever -- 2 lines for $49.99 each that includes voice, text and data (including 2GB at full-speed) on each line with a new 2-year agreement," he wrote. "We also now offer a Monthly4G no annual contract plan that gives you unlimited talk, text, and web (including 100MB at full-speed) for $50.

T-Mobile claims its new value plans already represent savings of $35 compared to AT&T, Verizon Wireless or Sprint Corp. (NYSE: S). But the question is, can T-Mobile go even lower? (See T-Mobile Stems Sub Losses With Pre-Paid Plans, T-Mobile & Walmart to Offer $30 HSPA+ Plan and T-Mobile Shakes Up Pricing Sans Unlimited Data .)

Right now, the carrier isn't saying how, or if, it will change its data plans, but it will likely have to do something drastic to get back on track in the U.S. Mizuho's Nelson believes pre-paid users will be its first target, which could put pressure on its smaller competitors, as well as Sprint's four pre-paid brands.

"Increased price competition would be negative for the entire industry; however, we believe PCS and LEAP are most at risk since they compete largely on price and we would expect T-Mobile to target prepaid customers," he says.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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Sarah Reedy
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Sarah Reedy,
User Rank: Blogger
12/5/2012 | 4:45:53 PM
re: T-Mobile: How Low Can It Go?


Right now, T-Mobile caps its data and slows down speeds once it's reached. If it can't lower prices anymore, then maybe one thing it could do is bring back truly unlimited data. Then it'd have a more powerful message - cheaper than Sprint AND unlimited still. 

kaps
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kaps,
User Rank: Light Beer
12/5/2012 | 4:45:52 PM
re: T-Mobile: How Low Can It Go?


What about trying a data-only plan that uses VoIP and no voice "minutes" to pay for? The deal they recently announced with Walmart ($30 a month, 100 minutes and 5 GB data) is a step in this direction... why not $20 or $25 for an all-data plan?


Then we'd see how "4G" the T-Mob network really is... 

kaps
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kaps,
User Rank: Light Beer
12/5/2012 | 4:45:52 PM
re: T-Mobile: How Low Can It Go?


What about trying a data-only plan that uses VoIP and no voice "minutes" to pay for? The deal they recently announced with Walmart ($30 a month, 100 minutes and 5 GB data) is a step in this direction... why not $20 or $25 for an all-data plan?


Then we'd see how "4G" the T-Mob network really is... 

goundan
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goundan,
User Rank: Light Beer
12/5/2012 | 4:45:45 PM
re: T-Mobile: How Low Can It Go?


T-Mo's post paid small business plans are even better. $44.99 (+$9 in taxes and standard fees) for unlimited talk, text and 5GB of data. Granted you have to pay full price for your phone on the value plans, but that still saves you a bundle over any other carrier or for that matter even Simple Mobile (TMo MVNO). Ask and recieve a free Cell-Fi repeater for improved in-building coverage for coverage weak spots. Add to that the best customer service among the major cell carriers. I'm surprised why more people don't switch to T-Mo.


Based on seeing T-Mo spectrum refarming exercies going on in the PCS band and the 2013 GSM shutoff, I think they may be going the HSPA-84 route until they can figure out the LTE transition. Not a bad option IMO.

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