T-Mobile Kicks Off 3 Days of News With $40 Simple Starter Plan
T-Mobile kicked off the first of three days of "un-carrier announcements" April 9, with the introduction of a new Simple Starter plan. Priced at $40 a month, with the promise of no overage fees ever, it's designed for "value-conscious Americans" who want "predictability and affordability."
The plan will be available April 12 and includes unlimited talking and texting and 500MB of data at 4G LTE speeds. (After 500MB, customers are pushed to a slower network.) To date, T-Mobile's lowest-cost Simple Choice plan starts at $50 (for unlimited talking and texting and 1GB of 4G LTE data.)
T-Mobile CEO John Legere shared the news in a lengthy blog post in which he reviewed some of the changes T-Mobile has made over the last year and the responses those changes have prompted from competitors. ("I don't know whether to laugh or cringe as they try to present themselves as anything other than the merciless greedy utilities they are," he wrote.) He insisted that T-Mobile has only just begun.
"Over the past year, my Un-carrier team and I have worked relentlessly, tearing up the old rules and restrictions and solving pain point after pain point, so that American consumers can finally enjoy all of the benefits that mobile technologies are capable of. Not just what the old school carriers decide for them," wrote Legere. "It's working! The movement has momentum ... I call it a revolution!"
In 2013, T-Mobile moved away from the industry-standard model of tying subsidized devices to two-year service contracts. It began offering monthly device financing plans; made it possible for customers to upgrade their devices more frequently; did away with international roaming fees for text messaging and data in more than 100 countries; and began offering 200MB of free data a month to anyone with a tablet that can access its network, encouraging people to use their tablets outside their homes.
The company additionally offered to pay the early termination fees (ETFs) of any subscribers wanting to leave a tier-one carrier for T-Mobile, offering many people, especially on family plans, their first real, cost-free option to change networks.
AT&T made T-Mobile customers a similar offer, though the total per line it was willing to pay was lower, and the offer was for a limited time.
"When we announce our first-quarter results for 2014, I think you'll share my conviction," Legere continued. "It will be plain as day that we have got it right and they haven't figured it out, or worse yet are selfishly unwilling to give customers what they really want and need."
T-Mobile will announce the results of its fiscal 2014 first quarter May 1.
During the fourth quarter of 2013, only Verizon Wireless added more new post-paid phone customers than T-Mobile, and even then, it was only by 24,000 customers. (T-Mobile added more than 1.5 million customers during the quarter, 869,000 of whom were "branded postpaid." By contrast, for all of 2012, it added only 1 million.)
The cost of acquiring those new customers—while T-Mobile's revenue grew 39 percent year-over-year, the company posted a loss of $20 million—was well worth it, Legere and Chief Marketing Officer Mike Siefert said during a Feb. 25 earnings call, describing the quality of the customers as "terrific."
(Verizon has suggested that the customers it's been losing to T-Mobile are mostly low-revenue, value-minded ones.)
"The un-carrier approach to value plans—and the announcements to come this week—are purpose-built to accelerate [our] momentum, continue disrupting and innovating this industry, and deliver even more amazing value and freedom to our customers," Legere said in his April 9 blog post.
"Stay tuned in the days ahead."