T-Mobile US is currently one of two nationwide operators offering flat-rate, unlimited data services to smartphone customers, an offering the carrier is not exactly wedded to, though thinks it can be used to drive additional margins.
Speaking at this week’s Goldman Sachs investor conference, T-Mobile US Chief Marketing Officer Mike Sievert told attendees that while the carrier does indeed provide unlimited as an option, that offering is not its reason for being. The comment seemed directed at rival Sprint, which is the other operator offering a flat-rate, unlimited data plan for customers, something that the carrier uses as a prominent marketing message. In fact, Sprint earlier this year unveiled new rate plans that guarantee customers will continue having access to unlimited data for as long as they keep the line of service.
Sprint has repeatedly said it does not think unlimited data will be something it can offer indefinitely, but has so far been unable to break itself out of the mold in an attempt to attract customers. That need to move away from unlimited could be pushed off by the carrier’s recent acquisition of Clearwire, which brings a large portfolio of 2.5 GHz spectrum that can used to bolster capacity in high-traffic markets.
Sievert noted that for T-Mobile US, unlimited is just one envelope of its offering that it expects will continue driving increased margins for the carrier. The carrier plans to continue offering that option to customers looking for peace of mind, especially those currently on a tiered plan offered by larger rivals, but that the pricing model for the offer could change over time.
Pricing was indeed a major talking point for the carrier, as Sievert noted being a price leader is not something T-Mobile US is dedicated to being. Sievert pointed to the fact that prior to this year, the carrier was seen as the pricing leader in the market, but was still bleeding customers. Earlier this year, T-Mobile rolled out its “Un-carrier” marketing initiative with new rate plans and device financing models that resulted in the carrier posted industry leading customer growth during the second quarter.
“We didn’t change prices … but we re-crafted the value proposition,” Sievert explained.
As for its competitors, T-Mobile US execs seemed to remain focused on AT&T, the company that attempted to acquire T-Mobile USA in 2011 before regulators stepped in and halted the process citing competitive concerns. Sievert explained that the carrier was specifically targeting its former suitor due to AT&T Mobility having what he said was the greatest number of dissatisfied customers.
“They are big and they are bad,” Sievert said, adding that during the second quarter T-Mobile US was seeing a 2.0 porting ratio in from both AT&T Mobility and Sprint.
On the hot topic of industry consolidation, T-Mobile US CFO Braxton Carter said he did not see a current environment for movement among the larger operators – especially a deal involving either Verizon Wireless and AT&T Mobility – but that eventually there would likely be a move made. The possibilities mentioned included a possible tie-up between T-Mobile US and Sprint, or perhaps a third-party coming in and either bolstering one of the smaller nationwide players or establishing itself as a new No. 4. Braxton explained that it was important to have a strong No. 3 operator to pressure the near-duopoly at the top.
“It’s not if, but when for more consolidation,” Braxton said.
T-Mobile US CTO Neville Ray also spoke to the investment community, highlighting T-Mobile US’ ongoing efforts to integrate MetroPCS, which he said were ahead of schedule, as well as the carrier’s push to hit 200 million potential customer covered with LTE services well before the end of the year. Ray said the carrier was looking to have some markets running across 40 megahertz of total spectrum for LTE services by year end, as well as the possibility of having some of the smaller CDMA markets currently supporting legacy MetroPCS customers turned down beginning late next year.
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