Bullet Point Analysis: Jump! on Demand - more than just device leasing

WHAT IS IT?

Jump! on Demand is T-Mobile’s variation on Sprint’s device leasing idea that started with the iPhone (i.e., iPhone for Life).  The lease term is for 18 months and users may trade-up up to three times (or upgrade to different smartphones [“superphones”]) in a year.  An enterprising customer can milk six upgrades within this term at months 1, 2, 3 and then in months 13, 14 and 15 (or variations).  

Jump! on Demand’s availability begins on June 28, 2015 and to kick the program off, a limited time promotion of an iPhone 6 (16 GB) at $15/month will be the go-to market poster child.  While this shares the Jump! moniker (Un-carrier 2.0), there isn’t any direct connection aside from the theme of quick device upgradability.

ANALYSIS

From a macro view, just copying Sprint’s leasing scheme isn’t enough based upon T-Mobile’s in your face/pro consumer market positioning. The big consumer benefits are:

• 18 month term vs. the Sprint norm of 24 months
• Ability to swap smartphones.  Customers may swap three times in a year (12 months) at AND a maximum of six times in 18 months.
• When a customer upgrades or swaps a smartphone, they receive a new, not refurbished, smartphone. 

WHAT’S IN IT FOR T-MOBILE?

• Customer retention: Every carrier’s base have those early adopters who want the latest and greatest.  Jump! on Demand appeals to that base with up to six swaps in the short 18 month lease term.   This in essence furthers these customers’ device addiction.  Additionally, the Jump! on Demand’s device portfolio contains the most desirable flagship ‘superphones’  (for now, i.e., iPhone 6, iPhone 6 Plus, Galaxy S6, Galaxy Note 4, LG G4).
• New customer acquisition: Any way to get a flagship device for cheap will draw attention. Coupled with plan promotions and lower pricing against the big two carriers, Jump! on Demand is a big and important weapon in the T-Mobile marketing arsenal. 
• Overall net additions: In the Q1 earnings call, T-Mobile increased their postpaid net add guidance from 2.2/3.2M to 3/3.5M. Note also that they added 1.1M postpaid customers in 1Q15 and that they intended to ‘front load’ the adds.  Of course front load could mean three quarters instead of the first half of ’15.
• Better vendor pricing leverage:  Though the price may be a wash from the customer facing view, large carriers with more scale look to limit their device acquisition costs. If a carrier can drive more volume, lower per unit price usually bears fruit, which helps in the whole profit picture.

WHICH COMPANIES WILL FEEL THE MOST IMPACT?

·      In the following order:

1.     Sprint – because the company is an alternative value leader against T-Mobile and those customers who are drawn to the once unique leasing scheme has been topped.  This also moves the focus for specifically those “Cut Your Bill in Half” Verizon and AT&T customers onto T-Mobile.  If the decision makers are device centric and price sensitive, then T-Mobile will be a prime consideration.

2.     Verizon Wireless – T-Mobile is specifically gunning for Verizon because that’s where the majority of the industry’s postpaid users are.  The Never Settle for Verizon campaign (a Test Drive [Un-carrier 5.0) on steroids) kicked off on May 5^th with a trial period from May 13th to the 31^st was extended until June 27.  Extending a switching campaign usually means that it is working.   

3.     AT&T – T-Mobile has historically targeted AT&T back in the same GSM technology days. I place AT&T last since of the big two, Verizon is the bigger fish in terms of postpaid base. Moreover, AT&T’s retention efforts have paid off tremendously in uber low churn metrics.  The aggressive $0 Next messaging has also been widely by AT&T as a key component of customer retention.

• Apple stands to gain in terms of T-Mobile volume based upon specifically the $15/month promotion.  Normally $27.08/month, T-Mobile’s $12.08 discounting is akin to a subsidy but T-Mobile PR cringed at that word.  Regardless of whether it’s filed as a marketing cost, the discounting is real.  Perhaps like in a car leasing analogy, a lower monthly price may be had with assigning a higher residual at lease end.
• Samsung, LG and possibly HTC may likely see more flagship device volume movement since Jump! on Demand calls for new and not refurbished devices. Logically, if there is the possibility of long term device swapping, more units should be in the pipeline. However, the iPhone promotion may increase the volume gap in Apple’s favor.
• Refurb and secondary market companies will sell increase business volumes. Though it’s logical that ‘used’ devices will feed the insurance side and some will find its way into MetroPCS, the secondary market whether domestic or international will see some benefit.

COMPETITIVE RESPONSE?

• There are now two national players offering leasing. AT&T and Verizon may hold off but they cannot ignore this device payment approach. The concept is simple and by all accounts from Sprint’s initial success, customers like it.  T-Mobile adopting the approach validates the concept in the marketplace.  AT&T and Verizon will have to respond and it has to be before Q4.  If not, they will be even more vulnerable.
• Sprint will need to modify its leasing approach, at a minimum expanding the term options, also before Q4. Matching the number of times to upgrade also needs careful consideration and figuring out a positive business case. Sprint has already stated that they can get favorable device pricing given SoftBank's global buying power.  Sprint needs to have a plan in place if it is to keep its positive net add momentum of which device leasing plays a crucial role. 
• Aside from national players, regional players may or may not join. Large regional carrier US Cellular joined the equipment installation plan fray.  For that carrier, an EIP is now competitive tablestakes against competitors, and a component of returning to positive postpaid net adds (after a couple of years in the negative territory).   

Can't Knock Sprint for Trying Hard, Now Direct 2 You

WHAT IS IT?

Direct 2 You is the company's latest action at building differentiation to stand apart against competitors.

 In a In a nutshell, it's concierge and personalized direct to the customer fulfillment of a previously placed order for customers who are upgrading.  Though it's positioned as a national program, only Kansas City, Chicago and Miami were announced.  As part of the announcement, Sprint notes a fleet of 5,000 branded cars and job creation numbers of 5,000.ANALYSISThere is no doubt that Sprint is trying out a lot of ideas to get itself out of the hole. CEO Claure deserves much of the credit in lighting a fire and compounding a sense of employee urgency in the company's restoration journey. Direct 2 You comes at the heels of the free unlimited international data (albeit 2G & only 15 countries)/text roaming announcement and RadioShack distribution deal in which immediately after the bankruptcy decision,  Sprint soon opened some sales doors.  Intertwined was a very 'political' announcement in a important spotlight market, Chicago where infrastructure investment and job creation (300) led the headlines. Here are some Direct 2 You pros:

• The effort is for only upgrades, which means that this is a customer retention effort. There is no minimum bill spend on attaining this concierge service.  Rewarding and cementing loyalty directly impacts churn. While 'Cut Your Bill in Half' and RadioShack store distribution expansion is about acquiring gross adds, Sprint needs better ways to fight against T-Mobile's switching momentum.
• The markets are important and 'friendly.' Starting off in the home HQ market, it gives Sprint some political capital for local job creation, rather than the very visible downsizing in recent past. Chicago as a market has been long discussed as a revitalization of the company story even in the Hesse era. Continuing that on top of meeting public commitments to re-elected Mayor Emanuel only makes sense. Finally, Miami is Claure's old home and obviously heavily Hispanic (a segment Sprint is heavily courting).  
• The effort is through an outsourced partnership, one that has a long history of residential/office fulfillment. There are no Sprint employees in the mix but ostensibly, the job creation is non-direct and there should not be any Sprint CapEx spend.
• Direct 2 You fulfillment is on the customer's schedule, seven days a week during business hours, and subject to where the customer decides to meet.  If customers cannot work around doing fulfillment around this flexibility, there's something wrong.  
• Sprint is working with a delivery zone structure where the representative can be dispatched productively according to meeting customers' time requirements. Further, there's linkage to Sprint systems and additional devices in case there is a customer's change of heart in a device.
• Finally, the fleet of 5,000 Sprint branded vehicles serve to further the company's brand awareness, much like everyone knows a Best Buy Geek Squad car or telephone or cable company truck.

Yet some cons and questions bug me:

• How much does this cost and how will this effort hit the bottom line? Clearly, it's a retention effort that hits the marketing and cost of goods sold line. This may be a wildcard from the financial standpoint but will market goodwill (e.g., Sprint for Chicago) pay off in terms of business and government accounts?
• Sprint says that in the delivery zone concept, it may not be economically feasible to meet a customer who may be outside a delivery zone. Financially, it makes sense but there may be the odd ball cases of high-value customers outside of those zones. Of course, marketing and public perception will be tested once those cases have media focus.
• Is this a beta effort? How long will the commitment be there? Yes, it's national but unlike T-Mobile that can paint itself in a corner with an Un-Carrier X.0 moniker, Sprint can get out if it gets too expensive and suffer ridicule. I supposed this could be a double-edge sword.

Competitive response may not be forthcoming as the big two of AT&T and Verizon Wireless does not have to do anything as they're still in the driver's seat.  T-Mobile has always prided itself as a leader of innovative things (i.e. Un-Carrier) and they have market momentum.  It's likely that competitors will paint this effort as a desperation gambit.  For Sprint, to its credit, they're trying things and cannot be faulted for that. But what's the cost and anticipated churn impact? We'll have to wait to see in calendar year 3Q and 4Q15 to see, won't we?

Tier One Carrier's Chief Marketing Officers - An early '15 Update

In the dynamic wireless business, there has been executive movement. There's no surprise that since the first post back in August 2013, there has been much movement.  Of the big four CMOs, only AT&T's David Christopher remains in the position.  There was an update in February 2014 when Jeff Hallock took over the duties from Bill Malloy at Sprint. However, Mr. Hallock's days are winding down as incoming CEO Claure announced Hallock's departure in November by the first quarter 2015.  As of this post, the end of 1Q15 is nearing and an announcement should be forthcoming.

On to the new faces, Verizon Wireless' Nancy Clark and T-Mobile's Andrew Sherrard. 

Nancy Clark

A Verizon contact stated that Ms. Clark took over from Ken Dixon in Fall 2014, who returned to a regional president's role in the Northeast. Perhaps the most visible campaign in Mr. Dixon's tenure the May 2014 branding for XLTE, positioned as an enhanced LTE experience.  Ms. Clark is the latest CMO in a long line of executives with deep operational experience. Mr. Dixon and Marni Walden before him all served as regional presidents.  

Senior Vice President & Chief Marketing Officer, Verizon Wireless

Nancy Clark is senior vice president and chief marketing officer for Verizon Wireless, the largest wireless company in the United States, with responsibility for growth and marketing initiatives for the company including brand management, customer loyalty, and introduction and delivery of mobile products and services.  A premier technology company, Verizon Wireless operates the nation's largest and most reliable 4G LTE network. 

Previously, Clark was head of the Operational Excellence Organization for Verizon, focused on identifying and implementing process improvements companywide.  Prior to that, Clark was president of the Northeast area for Verizon Wireless, responsible for the company's operations in the New England, New York Metro, Philadelphia Tri-State, upstate New York and Washington/Baltimore/Virginia regions.  She had also served as vice president of National Operations and president of the Great Plains region.

Clark began her telecommunications career with the former GTE, working in finance, marketing and sales positions for the company's Texas and California markets. When Verizon Wireless was formed in 2000, she joined the Midwest area and was responsible for sales channel operations, and then served the area as vice president - customer service.

Clark holds a bachelors degree in finance from Michigan State University and an masters of business administration from the University of Houston.

She is on the board of Safe Horizon, the largest victims' services agency in the United States, which assists more than 250,000 children, adults and families affected by crime and abuse throughout New York City each year.

Here's a YouTube video in which Ms. Clark talks in her previous head of Operational Excellence role. Sprinkled in the talk were clearly marketing themes. 

Ms. Clarke has surely been through the competitive wringer in the ultra-competitive 4Q14 in which Verizon Wireless faced one of its toughest quarters ever with attacks from Sprint and T-Mobile.  It'll be interesting to see if any new positioning develops beyond the steady network message of old.  Network parity is coming in '16 as T-Mobile and Sprint buildout their respective footprints towards 300 million population covered.   

Not many CMOs beyond Mike Sievert use Twitter but Nancy Clark does have a handle (@nancybclark) but her activity appears minimal.  


Andrew Sherrard

Andrew Sherrard joined T-Mobile in 2003 and currently serves as Executive Vice President and Chief Marketing Officer. Mr. Sherrard is responsible for strategic development and execution of all marketing, product development, pricing programs and activities that will help to drive revenue, customer growth and improve the customer experience for each of our brands. Prior to T-Mobile, Mr. Sherrard was a Marketing Manager for Clorox, responsible for developing and implementing the business plan, growing volume, market share and profit. While at Clorox, he also served as Brand Manager for GLAD and Pine sol, responsible for leading cross-functional teams, developing marketing strategies and plans, and managing profits and loss. Mr. Sherrard holds a Bachelor of Science degree from the United States Military Academy at West Point.

Mr. Sherrard is a 12 year T-Mobile industry veteran who was ironically the interim CMO for about six months before Mike Sievert joined T-Mobile and named CMO in November 2012. After this, he reverted to his role as Senior Vice President of Marketing.   For fans keeping score, in February, T-Mobile announced through a February 2015 SEC filing, Mike Sievert's new COO role. Underlying this SEC filing was a broad executive reorganization that moved Andrew into the CMO role.  

It's interesting that Mr. Sherrard made the jump to telecom after a career in the consumer packaged goods (CPG) industry, however, current COO Sievert also started out at Procter & Gamble (P&G). We can get a sense of Mr. Sherrard's marketing thoughts in a YouTube video recounting T-Mobile's transformation to differentiate itself as the UnCarrier.  Marketing geeks will appreciate the background, thinking for the carrier's path, and detailed marketing strategy.   At the 4Q14 earnings call, CEO Legere admitted that he and Mr. Sievert 'stole' the work that Mr. Sherrard started, which ultimately became the UnCarrier campaign. 

Unlike his predecessor, Mike Sievert, who is a frequent Twitter user, Mr. Sherrard doesn't appear to have a Twitter handle. A new UnCarrier (or is it Un-carrier?) announcement is slated for March 18, we'll see if the T-Mobile marketing playbook of press, social media and advertising continues. 

Bullet Point Analysis: Sprint's RadioShack Store Deal - A Lot of Positives

What is it?

RadioShack's bankruptcy allowed Sprint to partner with General Wireless Inc., a subsidiary of Standard General LP, RadioShack’s largest shareholder (a hedge fund), to increase Sprint branded retail distribution by approximately 1,750 stores, more than doubling Sprint's current 1,100 company store count. The transaction is subject to approval by the bankruptcy court.

The plan at that point will be to establish co-branded (Sprint and RadioShack) stores where Sprint and RadioShack would sell their separate services. 

Analysis

Although it didn't make company's FY3Q14 earnings call deck, it's better late than never.  

The deal has many wins for Sprint since:

• Above all, the company expands their distribution base to help with gross additions (postpaid and prepaid brands) and get potential subscribers in the door interested in the much campaigned "Cut Your Bill in Half Event" that will continue into 2015.

• Distribution count will exceed surging rival T-Mobile. In the FY3Q14 earnings call, CEO Claure stated that Sprint was 500-600 less than T-Mobile. With the new stores, gets T-Mobile's count in one swoop, bringing the total Sprint count to over 2,800 retail points of distribution.  

• Those 1,750 stores have been cherry picked.  Logically, these new stores would not cannibalize existing Sprint retail traffic, and serve the right Sprint target demographic - Verizon and AT&T prime customers.

• The stores will be co-branded but Sprint is the primary brand. Sprint and RadioShack says that each brand's customers may be cross-marketed to but the ability to share lease space costs should not be overlooked. Sprint will only occupy a third of the store space so relative to operating a full store, Sprint in theory has lower costs.

• With all the negativity of a declining brand and controlling costs, headcount cuts have been an unfortunate tool. However, Sprint will need employees to operate these stores. RadioShack employees who are already trained at selling mobile devices and plans are logical candidates. In theory, it's an easy transition as reps will only need to focus on Sprint plans versus the many prepaid MVNO options and those of Verizon and AT&T. In fact, because of the breadth of knowledge, these reps will know what competitors' plan weak points may be. 

Yet there are questions. 

• Like many deals, the financial and commitment terms were not divulged so it's undetermined how good of a long term financial deal this is.  

• The deal needs the blessing of the bankruptcy court and if that is given in short order, this doesn't mean that Sprint can move in immediately.  The store rep human resources process will need to be address, planning the look and buildout of a third of every store will need to be done.  Given this, the impact of the 2015 gross additions look to be in the back half of the year.

• This last point can be both a positive and negative.   By taking over these 1,750 stores, Sprint takes out the same number of distribution points for postpaid rivals AT&T and Verizon (no T-Mobile) and Tracfone prepaid brands (US Cellular in some markets).  The big "BUT" is the amount of wireless business a declining RadioShack generated for competitors. If it's immaterial, then it's not that great of a loss for those competitors.

Overall, this deal is one of the best moves Sprint has jumped on since the beginning of CEO  Claure's tenure. 

Video: Auction 97 Discussion Before Results

The AWS-3 auction that began in mid-November 2014 mercifully ended today, January 29. The in-take was $45 billion in bids subject to discounting some bidding credits.  Many articles have been written on how it exceeded expectations, producing more than two times lofty projections.  The ink isn't dry on this and as of this writing, we don't know who the winning bidders were but it's safe to say that those carriers with positions in AWS-1 (e.g., Tier 1 - AT&T, Verizon and T-Mobile) will be the winners. It's also likely those with deeper pockets will likely control the major urban markets (e.g., Los Angeles, NYC, etc.)

Here are my thoughts with RCR Wireless' Dan Meyer in mid-January. Key things we discussed were deployment conjecture, spectrum clearing and sharing with the Federal government, implications for the 2016 broadcast incentive auction, and general idle chit chat.

What 2015 Brings

Originally posted on Fiercewireless just before the Christmas holiday.

2014 is nearly at and end and it's the time of the year when there are countless year-end review articles and 2015 predictions. While there were many highlights of 2014, I choose to hone in on network and competition.  Instead of predictions, my 2015 expectations have been laid out with technology paths and the previous year's events.

Network 

Every carrier knows that beyond service plan value and pricing, the network is the core of customer choice. It's no surprise that despite goals the carriers reach, improving, expanding and transforming the network will never really be done. Although AT&T Mobility and Verizon Wireless have reached their coverage targets, capital is still being expended to bolster networks for capacity and coverage. T-Mobile US and Sprint continue their breakneck pace to reach LTE network parity with larger competitors.   

AT&T met its 300 million POP coverage target in early September, surpassing its original end of the year target as it needed to close the gap against its main rival, Verizon. AT&T also needed to keep pace in its Voice over LTE introduction, albeit available in only in select markets. Aside from adding coverage, capacity, and expanding VoLTE in 2015, the company continues its ambitious transformation into a software-centric network by 2020.  Two big acquisitions, slated to be complete by the first half of 2015 will trigger network related work.  First, the DirecTV acquisition, the company will need to fulfill its promise to provide fixed wireless broadband to rural markets. With the acquisition of Mexican carrier Iusacell expected to close in the first quarter of next year, much of the remaining year should be laying a foundation for what AT&T touts to be the first North American mobile service area.

Sprint's 2014 travails from the "rip and replace" Network Vision program and turbulent corporate changes contributed to massive uncertainty and subscriber losses. Although the company ended the year with 260 million LTE POPs covered on its PCS spectrum, roaming deals with rural carriers is set to expand its own LTE geographic reach to 298 million POPs in 2015. Ironically, as competitors over delivered on coverage and timing, Sprint met its end of year 100 million 2.5GHz LTE POP target, despite skepticism. In August, the 2.5 GHz buildout strategy shifted to address the heavy data consumption markets, with the logic that the popular unlimited proposition is empty without a high capacity foundation. Still, Sprint hasn't disclosed any POP targets for 2015, as it has previously.   

T-Mobile over delivered and beat its own 2014 250 million POP target with 260 million covered LTE POPs. For 2014, the network story was one of aggressive execution by acquiring and deploying 700 MHz A-Block spectrum and refarming/implementing MetroPCS' spectrum to exceed its target. The company is very public about reaching an end of 2015 300 million POP target (without roaming) to close the network perception gap against larger competitors. In doing so, it will continue work to put in service remaining 700, AWS and PCS spectrum.  At the same time, to get better low-band breadth, it will opportunistically purchase additional 700 MHz spectrum. However, since some regional and rural carriers will implement the same A-Block flavor, LTE roaming agreements are logical.

Though Verizon Wireless technically met the 30 million POPs covered threshold in mid-2013, the company continued to deploy and put into service AWS spectrum for capacity and fill-in. Since reaching the 300 million mark, it added 8 million more by the end of 2014. Though it has already started refarming its PCS spectrum for LTE on a limited scale, this effort will likely continue as planned in 2015.

Technologies of Common Interest

• Carrier Aggregation: This LTE Advanced feature provides the capability to extend coverage, capacity and speed. AT&T has already started using the carrier aggregation feature mainly with its 700 and AWS assets. While AT&T does not have a national AWS footprint, it's logical that PCS spectrum that it is refarming would also be put into play.  As part of its 2014 2.5 GHz buildout, Sprint stated that it was rolling out two-carrier aggregation but eventually add another carrier (end of 2015) for three-carrier aggregation to raise the speed game.  T-Mobile has not said when it will deploy carrier aggregation, but it will be planned for the coming years to piece together its 700 and AWS and PCS assets.  Verizon Wireless will enable carrier aggregation to its national 700 (Band 13) and AWS footprint.   Given early PCS refarming and LTE deployment, there could be the technical possibility of 700 and PCS aggregation where appropriate.
  
  One likely byproduct of all this work will be increased speed, possibly allowing one carrier to best another nationally or in specific markets. Regardless, RootMetrics is the biggest beneficiary, as every carrier have used reliability and speed claims for public relations from their reports. Behind the scenes, it's certain that carrier in-house test organizations, third party specialists Nielsen Mobile and GWS will be busy verifying.

• VoLTE: AT&T, T-Mobile and Verizon Wireless all have implemented VoLTE. Only AT&T has not claimed nationwide capability but that hasn't stopped inter-carrier interoperability activity planned for 2015. Though T-Mobile was snubbed from the press release, it would be logical that they plug in eventually.  Sprint's CDMA-based HD Voice implementation and introduction leaves them out of the VoLTE club temporarily but it has a more important focus: expanding 800 MHz and 2.5 GHz LTE. 

• LTE Broadcast: Only AT&T and Verizon have committed to this technology and have high hopes to monetize their investment.  Business models will be tested for sure.

• Wi-Fi calling: While T-Mobile used an entire "uncarrier" number (7.0) on Wi-Fi calling, helped with iPhone, it's a low priority for the big two rivals. Still Verizon Wireless and AT&T expect to deliver this capability as it likely helps business and vacationers traveling abroad.

Competition

2014 was remarkable in the level of competition. Since space is short, we'll just focus on postpaid and prepaid. On the postpaid side, there were nearly 80 pricing actions and promotions from the top four carriers, not counting the numerous extensions of promotional offers. This was more than double that of 2013. Several standout service plan tools drove customer action; these included Early Termination Fee (ETF) credit, tablet data for life, double data promotions, and no money down equipment installation plans.  

Carriers departed from the past practice of constantly restructuring their rate plans, gaming the right price point with the right data level. Though AT&T and Verizon changed their plans in the beginning of the year (i.e., Mobile Share to Mobile Share Value and Share Everything to More Everything) and Sprint rebooted in August with its Family Share Pack and iPhone for Life, limited time promotions in the back half of 2014 drove postpaid volatility and grabbed all the media headlines. Promotions gave carriers a temporary lever to address competition without permanent price drops or higher data levels.

Entering the fourth quarter, this visual graph showed the postpaid net add trending in the previous three quarters, showing T-Mobile and Verizon Wireless with good postpaid net add energy.

Source: Carrier Reports

However, carriers' full 2014 results won't be known until late January or early February when fourth-quarter earnings calls are conducted.  What we do know has been telegraphed: due to intense competition, Verizon and AT&T warned that churn was a concern. T-Mobile increase its 2014 total net add guidance from 2.8-3.3 million to 4.3-4.7 million and Sprint was confident that they would deliver positive fourth-quarter postpaid net adds. 

Without full 2014 data, can we expect the same intensity of postpaid competition in 2015? It's obvious that competition will never cease in the wireless sector but there are some road signs that it won't lull.

• Sprint's need to grow: Sprint lost nearly 600,000 customers by Q3. They cannot stop the march to win back customers.  Going after AT&T's and Verizon's large postpaid bases will likely continue, but how aggressive will the campaign be – sustained intensity in each quarter or pick and choose?
• T-Mobile and Sprint will continue to employ a $350 ETF switching credit. For T-Mobile, it's an "uncarrier 4.0" tenet while Sprint will need it as a necessary tool to prevent T-Mobile getting all the switching spoils.
• AT&T and Verizon won't sit back and play defense. 2014 showed that the big two hit back with their own switching and double data promotions. However, they won't be instigators.

Yet the intensity may be tempered as there were signs of financial community/investor skittishness that dropped stock prices. Industry competition is great for consumers but the wireless sector's volatility impacts decreasing margins and perceived overpaying for future spectrum.  2014 will likely be a blowout year for T-Mobile but replicating that performance has already been downplayed at various recent investor conferences. Rather, the thrust was about stabilizing ARPU, retention and upselling. Still, T-Mobile won't stop given their momentum.   

Prepaid never sees the headlines that postpaid commands. Though growth wasn't what it was in previous years, it's still hotly contested and relevant.  In prepaid, there were about 70 price and promotion actions, not counting any extensions. This was up a hair from 2013. The prepaid graph illustrates TracFone (folded in acquisitions) and T-Mobile being the big winners up to Q3.

Source: Carrier Reports

Unlike the postpaid activity predominantly occurring in the first three months and the last four months of the year, prepaid promotions and actions were evenly spread across the year. The battles for high-value monthly users consistently apply among the various TracFone brands, AT&T's Cricket, T-Mobile's MetroPCS and Sprint's Boost and Virgin Mobile brands.  While price sensitivity has always been a prepaid hallmark, a shift in network and LTE marketing is broadening.  Meanwhile, legacy CDMA user migration is still on the plate for Cricket and MetroPCS as each seek to move those customers onto the parent's LTE networks. 

2015 competition should be spirited, as Cricket and MetroPCS will continue their head-to-head fight. Boost and Virgin will try to stay relevant in the fight while. Given postpaid's momentum, prepaid growth may be stymied at similar 2014 rates. Get the popcorn ready for next year.

T-Mobile's New International MVNO Partner - Vodafone! Slap in Verizon's Face?

What is It?

T-Mobile announced that it reached an agreement with Vodafone Americas for new MVNO-based services for Vodafone's 400 US based multinational customers and potentially 500 customers who do have a strong US presence. Availability for the service is expected to roll out in late fall 2015. 

Analysis

Clearly both parties benefit from this relationship.

For T-Mobile, this is a way to get more subscribers on its network. 400 US based multinationals get the carrier indirectly into enterprise where competitors AT&T and Verizon Wireless have long dominated. While the knee-jerk reaction is to focus on smartphones, the announcement helps T-Mobile's other wholesale segment, machine-to-machine (M2M). 

For Vodafone, the US-based mobile offering provides the operator to enable service bundling opportunities, including low cost mobile roaming across its 27 country footprint.   The T-Mobile agreement should be more than an overall US play as Vodafone Americas include Canada and Latin America.  The company will push this as part of Vodafone's OneNet solution which touts fixed-wireless solutions.  The solution bundles include the usual enterprise operator offerings such as cloud services, M2M, telecom expense management, security and access to a global IP-VPN network.

The question for T-Mobile is many total wholesale subscribers do 400 multinational customers come with? Perhaps, it doesn't matter since in wholesale, there is none of the high cost of customer acquisition as in its retail segment.  The benefit that carrier is also hoping for is to move enterprise multinationals from Verizon Wireless and AT&T.  

So given Vodafone's long history with Verizon Wireless, it does seem to be a slap in the face. After all, the 400 target customer accounts are all US based and the potential for the other 500 potential accounts have a strong US presence, which means some could be existing Verizon Wireless clients. But then like many multinational enterprises, deals with multiple vendors provides choice and negotiating leverage which means T-Mobile/Vodafone Americas may not have exclusive deals.

It's also telling that Vodafone did not cut the MVNO deal with AT&T since AT&T's current LTE US footprint is larger overall. But if T-Mobile's wholesale business unit follows its retail unit, being the low-cost value provider could be the swaying element on top of its expanding national LTE network message, one with a goal that meets 300M POPs by end of year 2015.