I've been watching the message board talk about T-Mobile's "Binge On" free video streaming and I have to say that I think some of you are not grasping the strategic thrust of what the carrier is trying to do.
T-Mobile US Inc. 's CEO John Legere likes to say each "Un-carrier" move is reducing "pain points" for customers. Indeed, video streaming for HBO and Hulu subscribers on the T-Mobile network that doesn't count against their data bucket is undoubtedly going to save some users some money, as well as attracting new subscribers. (see T-Mobile Goes OTT With Free Video Streaming.)
But there's always another element too: Legere likes to riff on how the wireless industry is "broken" and is never slow to go after his wireless rivals. The T-Mobile team is continually pushing AT&T Inc. (NYSE: T), Sprint Corp. (NYSE: S) and Verizon Wireless to follow their lead or eat their dust.
This has worked well with device loan programs and global roaming. I think the video streaming move is one that most carriers won't be following. In fact, they probably can't follow them because of bandwidth and cost constraints.
(By the way, to understand why this duality of approach is prevalent in the Un-carrier moves, you only have to look at Legere's fascination with Batman. A super-rich man-about-town that moonlights trying to fight the injustices he perceives in the world. Come on!)
So why video streaming? What T-Mobile wants to do now is get some clear water between itself and Sprint and establish itself -- even more than it has -- as the hip alternative to AT&T and Verizon. I doubt it can catch Ma Bell or Big Red in sheer subscriber terms but it can offer a serious third choice for the consumer.
Free video streaming is one way to do this. Remember that T-Mobile has around twice the spectrum per user as AT&T and Verizon at present. Verizon has even said that it needs some more high-band spectrum to add capacity. (See Verizon to Start Deploying LTE-U in 2016.)
What T-Mobile still needs to do is add more users and devices to its network. In simple terms, it has the radio room to expand.
This won't just mean adding more smartphones, but tablets too. I heard on the grapevine that T-Mobile was stocking up tablet inventory ahead of the Un-carrier X announcement. Plenty of people already watch a boatload of TV on their tablets. With a 3GB plan for the tablet, T-Mobile users -- new and old -- get free video streaming on device.
And make no mistake, this is about acquiring new customers and keeping existing ones. As Tom Nolle points out on our message boards, capital expenditure costs are about 20 cents on the dollar, customer acquisition costs are about 12 cents on the dollar. So T-Mobile has a chance to offset the costs of free video streaming. (See Operators Blunder in Online Video Era.)
And the more it adds customers and reduces churn, the more attractive it becomes as acquisition possibility. Oh sure, I don't believe Deutsche Telekom AG (NYSE: DT) is in any hurry to sell off T-Mobile and I think it will want a pretty penny for it.
That doesn't mean it won't happen in future though. Who will buy? I'm not sure yet. Perhaps Carlos Slim could engineer a reverse Ma Bell (don't try this at home!) and use T-Mobile to go North of border?
So, T-Mobile's Legere loves to sell these Un-carrier moves as altrustic for consumers, and they may be that, but there's a strategy behind them too.
— Dan Jones, Mobile Editor, Light Reading