Did T-Mobile actually change the wireless industry?


A T-Mobile employee at a retail store in Torrance, Calif. (Patrick T. Fallon/Bloomberg)
December 6, 2013

AT&T will introduce new plans Dec. 8 aimed at retaining and attracting budget-conscious smartphone users. The plans, an update to its monthly “Mobile Share” plans, will factor the price of a smartphone into the plan.

Currently, Mobile Share subscribers pay a set monthly fee for every device on a plan, in addition to what they pay for a set amount of data that’s shared across devices. Now, plan rates will drop by $15 once the device is paid off, or start at the lower price point if you bring in your own device.

The strategy is similar to one T-Mobile introduced with its newest plans this spring, which essentially separates the price of the device from the price of data in consumers’ monthly bills instead of bundling them together. When T-Mobile announced its new approach to pricing, chief executive John Legere said that the move would change the wireless industry. Shortly after, Sprint also introduced plans that separate the cost of a phone from the data. With AT&T now taking the same approach, has T-Mobile actually succeeded in changing the industry?

Not so fast, said wireless industry analyst Jeff Kagan. While T-Mobile was certainly the first to move on this strategy, he said that framing AT&T’s move as a reaction probably gives the smaller carrier a bit too much credit. While T-Mobile was gaining subscribers, it was not eating into AT&T’s customer base heavily enough to prompt such a fast reaction.

But, Kagan said, the fundamental change in these plans — separating the monthly cost of device and data — was a foreseeable change for the industry as smartphone growth in the United States slows.

With fewer new smartphone subscribers, Kagan said, the major carriers have to work harder to keep customers from jumping ship to budget networks that may offer cheaper rates but fewer perks. More seasoned smartphone customers may decide, for example, that they’re happy to give up some coverage or call quality to save some money each month.

T-Mobile, Kagan said, was “just at the bleeding edge because they needed to be.” As the smallest of the country’s four major carriers, T-Mobile had the greatest need to do something bold to stay afloat, he noted. And it is to the credit of Legere, who’s been with the company for about a year, that the carrier’s new plans and flashy rhetoric have put it back into the conversation and helped it gain back subscribers.

So while T-Mobile’s new plans may have helped push the industry down the path of offering consumers more choice, Kagan said, it can hardly be seen as the only driving force.

“I don’t think AT&T’s following them, but they’re all heading in that same general direction: giving customers more choice,” he said.

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Hayley Tsukayama covers consumer technology for The Washington Post.
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