T-Mobile deploys prepaid campaign against cable MVNOs

T-Mobile announced a new ad campaign designed to siphon off mobile customers from Comcast and Charter Communications. Specifically, the company is taking aim at the cable companies' "exploding" offers that rise in price after a year's worth of cheaper, introductory pricing.

"The world is awash in yada yada – added taxes, surprise charges, exploding bills and plenty of other gotchas – everywhere from airlines to hotels to cable broadband and beyond. Not Metro by T-Mobile. Metro is grounded in simplicity, predictability and transparency," T-Mobile wrote in a release from its Metro prepaid brand. The carrier's prepaid business is now headed by the carrier's former SVP of public relations, Clint Patterson.

T-Mobile also released its first ad in the campaign:

The operator's move is the latest skirmish in a widening ad war between T-Mobile and the nation's cable companies. Both are rapidly encroaching into each other's core business areas: T-Mobile is selling fixed wireless home Internet services, while the cable companies are selling smartphone connections.

And each side is enjoying significant traction. Specifically, FWA services like those from T-Mobile continue to gobble up much of the growth in the US broadband market, while cable MVNOs like Comcast and Charter now account for fully half of all new wireless postpaid customers.

The newest offer

T-Mobile said its Metro brand is offering unlimited data services for $25 per month to customers who bring their own devices. The offer kicks in after customers' first month of service, requires automatic payments and includes 35GB per month of unfettered speeds. The pricing is noteworthy considering it's roughly the same as Dish Network's initial Boost Infinite postpaid offer.

Comcast's unlimited data pricing starts at around $45 per month for one line of service, while Charter's pricing starts at around $30 per month for one line of service.

T-Mobile is also pairing its Metro offerings with its fixed wireless access (FWA) service for $20 per month. That pricing kicks in after the first month of service and requires customers to sign up for the US government's Affordable Connectivity Program (ACP). The ACP provides up to $30 per month to low-income Internet customers.

Finally, T-Mobile is also juicing its campaign with its new "Broadband BS Fund."

"Metro by T-Mobile has created the Broadband BS Fund to help Spectrum and Xfinity customers cover their exploding cable wireless bills, with a total of up to $1 million set aside," according to T-Mobile. Customers can apply for the funds by submitting their "story of Big Cable trauma" to T-Mobile's website.

The context

T-Mobile's new campaign appears specifically targeted at Charter's Spectrum One bundle of mobile and Internet services. "Many Spectrum Mobile customers will see their wireless bills balloon by as much as $360 per year, starting next month when Spectrum's sneaky 'introductory' promo expires," T-Mobile wrote in its release.

Already financial analysts are fretting over how that price increase – which will start in October – might affect Charter's customer base. "It will come with higher churn as at least some of those customers choose not to swallow the step-up," noted the analysts at MoffettNathanson in a recent note to investors.

But Charter officials say they aren't worried. "These are really good customers," Charter CEO Chris Winfrey said in response to a question on the topic, during his company's recent quarterly conference call. "I don't see any reason we'll have difficulty managing through those roll-offs ... I think we've found something that sticks."

Indeed, some analysts are hoping for an overall lift in Charter's average revenues per user (ARPU) as its Spectrum One pricing rises and its recent home Internet price increases go into effect.

And that's noteworthy considering T-Mobile is also working to increase its overall ARPUs. The operator just this week introduced its most expensive plan yet: Go5G Next, which offers customers a new phone every year.

"This is not a major move by T-Mobile, but it underscores a pivot to ARPU growth already underway at T-Mobile," wrote the financial analysts at LightShed Partners in a recent post (registration required). "Driving higher ARPU is the logical next step for T-Mobile. Market share gains in the paltry growth of a mature industry have not been enough to deliver more than low single digit revenue growth for T-Mobile. Net subscriber additions may be great for confetti cannon press releases, but it's getting harder for T-Mobile to distract investor attention from its pedestrian wireless service revenue growth, especially since it has been trailing AT&T's growth."

Regardless, the newest ad campaign from T-Mobile – which specifically targets the cable industry – represents a far cry from the operator's initial take on cable MVNOs. In 2018, T-Mobile's former CEO John Legere referred to the new mobile services from Comcast and Charter as "irrelevant squared."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano