T-Mobile Reflects on the End of International Price Gouging

T-Mobile's business customers are traveling more and using 28 times more data since it became the first carrier to stop charging data roaming fees.

Last October, T-Mobile called out its rivals for unnecessarily overcharging customers the moment they left U.S. soil —or, "gouging them to the tune of 90 percent margins," in the words of T-Mobile CEO John Legere—and declared itself a new example for the industry. It stopped charging subscribers international texting and data roaming fees and lowered the price of calls from more than 120 countries to a flat rate of 20 cents per minute. Six months later, it's ready to talk about the impact of that decision.

Simple Choice customers who travel internationally are making three times more calls, sending seven times more text messages and using 28 times more data, T-Mobile said, releasing the results of a new survey May 13.

"Sure, you can say, if it's free, of course people are using more. But those aren't industry averages. It's the per-person increase," Drew Kelton, T-Mobile's executive vice president of Business Markets, told eWEEK the day before. "These numbers really mean something when you break it down to what it means to each person."

For example, data roaming fees create a lot of unnecessary stress for business users. If you're lost on the way to a sales call in London or Barcelona or [insert any new city], "There's that moment of, do I launch Google Maps and get charged who knows what, or do I wander around for 10 more minutes and hope that I find it?" said Kelton. "People don't have to deal with that anymore."

Kelton has been busy these last six months making businesses realize what the deal can mean for them—in some cases, making them simply realize that it does apply to them.

Carriers often create customized plans for business customers, said Kelton. "It makes you feel special, as a customer, but it gets complicated. And while a complicated solution might seem a good fit for a complicated problem, sometimes complicated problems can be solved with simple answers."

Kelton said that in some instances businesses, unsure of employees' data needs, will sign up everyone for the middle option—whatever it is—assuming it's the safest way to go.

"What we present is, look at offering role-specific plans," he said. "I can go in and say off the bat, 'These 200 people need more data, but those 1,200 can be on the simplest option. You're overpaying for them.'"

T-Mobile's messaging is "resonating," said Kelton. "Even the message of, 'I'm never going to get an overage bill,' is cool."

Businesses, particularly smaller ones, for whom the cost of a few internationally traveling employees can really pinch, have begun to enjoy the benefits of the new T-Mobile offering. They're traveling internationally more often, and they're using much more data when they do," he said.

Between the fourth quarter of 2012 and the fourth quarter of 2013, the amount of international traveling done by T-Mobile's business customers rose by 3 percent; while its small business customers increased their international travel by 47 percent. Between the first quarter of 2013 and the first quarter of 2014, big business travel increased by 14 percent, while T-Mobile's small business customers increased their international travel by an astounding 259 percent.

Further, between the first quarter of 2013 and the first quarter of 2014, the amount of data used by its big business customers increased by four times, while small business data increased by 11 times.

The top five countries where small businesses are using the most data are, respectively, Mexico, Canada, the United Kingdom, Colombia and France (though the number of gigabytes being used in Mexico is nearly three times that of the other top-five countries).

Big businesses, by contrast, are using the most data in Mexico, the United Kingdom, Canada, Germany and France, respectively, and with less dramatic differences in gigabyte use.

T-Mobile's free international roaming offer is on 2G and 3G networks—something detractors like to poke it, though these networks can very sufficiently handle text messages and quick check-ins to Facebook and the like. T-Mobile also sells Speed Passes for limited access to 4G networks. These range from a one-day pass to 100MB for $15, or a two-week, 500MB pass for $50.

What percentage of customers are buying Speed Passes?

"Less than 1 percent," said Kelton, adding that the figure suggests how little was required on the side of carriers to majorly improve the situation for subscribers.

"When we made the offer, we didn't think we'd get hundreds of thousands of new roamers. We thought it would be more that people would choose T-Mobile because there wasn't the gotcha' when they got home," said Kelton. "It turns out, both have happened."

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