WHAT IS IT?
On Wednesday, April 8, T-Mobile announced a new plan called Simple Starter aimed at the individual entry smartphone data user. Specifically with the following features:
ANALYSIS
There are benefits for T-Mobile but this minor plan introduction isn't likely to shake up the industry, hence no UnCarrier X.0 associated with it. Even its previous plan adjustment (31 days prior), that offered additional data and expanded the Simple Choice portfolio from three plans to four and Stateside international texting did not warrant a X.0 or 4.1 moniker.
T-Mobile Benefits:
While T-Mobile has an opportunity to upsell its featurephone users, its designs are at other carriers' postpaid featurephone base. As of 4Q13, Verizon Wireless has 30% of its postpaid subs not on smartphones while it's 23% at AT&T and around 20% or less at Sprint. This is helped by T-Mobile's $650 switching offer (UnCarrier 4.0) launched in January. On pure out-the-door price perspective, T-Mobile bests even the lower and equivalent pricing (recent price moves at the entry end) from AT&T ($25/1GB) and Verizon Wireless ($30/500MB) simply because of the device access charge ($25/AT&T NEXT, $30/Verizon Wireless EDGE). Sprint's $55 single line Framily plan also comes in higher. Given the target featurephone customer is likely to be price sensitive, T-Mobile may be successful with this segment.
Looking at Simple Starter, the plan is characteristically old school prepaid. That is, if a customer runs out of data, they can refill. In the olden days, it was minutes, now it's data. Verizon Allset and AT&T GoPhone plans do just that. Innovation-wise and addressing 'users' pain points and frustrations,' Simple Starter is unremarkable.
COMPETITIVE IMPACT?
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On Wednesday, April 8, T-Mobile announced a new plan called Simple Starter aimed at the individual entry smartphone data user. Specifically with the following features:
- 500 MB of LTE data
- Unlimited Talk and Text
- The subscriber has ability to add on data when 500 MB has been reached
- For an additional $5, the customer can add 500 MB/day or $10 for the next week
ANALYSIS
There are benefits for T-Mobile but this minor plan introduction isn't likely to shake up the industry, hence no UnCarrier X.0 associated with it. Even its previous plan adjustment (31 days prior), that offered additional data and expanded the Simple Choice portfolio from three plans to four and Stateside international texting did not warrant a X.0 or 4.1 moniker.
T-Mobile Benefits:
- From a portfolio viewpoint, T-Mobile now has a lower price point to grab entry data users who aren't sure how much data they may use.
While T-Mobile has an opportunity to upsell its featurephone users, its designs are at other carriers' postpaid featurephone base. As of 4Q13, Verizon Wireless has 30% of its postpaid subs not on smartphones while it's 23% at AT&T and around 20% or less at Sprint. This is helped by T-Mobile's $650 switching offer (UnCarrier 4.0) launched in January. On pure out-the-door price perspective, T-Mobile bests even the lower and equivalent pricing (recent price moves at the entry end) from AT&T ($25/1GB) and Verizon Wireless ($30/500MB) simply because of the device access charge ($25/AT&T NEXT, $30/Verizon Wireless EDGE). Sprint's $55 single line Framily plan also comes in higher. Given the target featurephone customer is likely to be price sensitive, T-Mobile may be successful with this segment. - T-Mobile also has an opportunity in converting prepaid users to postpaid. Let's face it, the 'no-contract' has some of the hallmarks of prepaid but it's still postpaid. Simple Choice and Simple Starter plans do not have the 'handcuffs' that come with subsidized two-year contracts, however, most T-Mobile customers will take advantage of the equipment installation plan (EIP) with 24 month device financing (a different type of contract lock). A quick scan of the leading monthly prepaid offerings suggest that the $40 price point for Simple Starter has the potential to make inroads into the prepaid sector. Looking at the table below, most competitors are at the $45 and greater price point. Note that the only prepaid offerings at $40 are MetroPCS (T-Mobile brand) and Net10 and Simple Mobile (Tracfone that also buys wholesale from T-Mobile).
Looking at Simple Starter, the plan is characteristically old school prepaid. That is, if a customer runs out of data, they can refill. In the olden days, it was minutes, now it's data. Verizon Allset and AT&T GoPhone plans do just that. Innovation-wise and addressing 'users' pain points and frustrations,' Simple Starter is unremarkable.
- If T-Mobile is successful with drawing price sensitive entry postpaid switchers and prepaid (that's where the industry growth is), T-Mobile has one of several upcoming elements to help drive to their 2014 2-3 million postpaid net add target.
- It's clear that Tier 1 competitors' featurephone bases are the targets of Simple Starter, helped with the UnCarrier 4.0 switching proposition. As T-Mobile is offering a out-the-door lower price, it will be tough for rivals to drop pricing, especially at AT&T and Verizon because they want to maintain premium network brand positioning. At Sprint, Framily from a single line price viewpoint is vulnerable. If T-Mobile had been feeding off Sprint users in the past, it will continue to do with the remaining featurephone base. Sprint's equivalent switching promotion may help stem the bleeding in possibly attracting gross adds. If the T-Mobile postpaid brand aggressively targets the prepaid segments that MetroPCS doesn't, this could spell trouble for Tracfone, AT&T, Verizon Wireless and Sprint's prepaid group.
- T-Mobile claims to have additional minor and major announcements to come. All those are components to reach or exceed their 2014 goals. By all rumors, T-Mobile will post stellar postpaid net adds for Q1 2014 (1million+?). Let's see how T-Mobile does Q2 and Q3 go for gross and net adds.
