T-Mobile's new business pricing targets AT&T and Verizon
- 19 March, 2015 07:21
T-Mobile is aggressively going after business customers by offering the same kind of low-cost, simplified pricing and monthly service plans it has used to good effect with consumers.
Mobile CEO John Legere on Wednesday unveiled a new "Un-carrier for Business" plan priced at a flat $15 per phone line per month for up to 1,000 lines, which includes unlimited talk, text and 1GB of data per line. The price above 1,000 is just $10. Families of T-Mobile business customers will also receive discounts of up to 50% on their consumer lines.
Legere also had two new lures for consumers: T-Mobile will cover all outstanding phone and tablet payments up to $650 per line for those 29 million customers currently locked in to phone purchase payments with AT&T, Sprint and Verizon.
He also committed that both business and consumer customers on T-Mobile Simple Choice plans won't see rates go up as long they remain with T-Mobile; and customers on unlimited plans will see rates locked-in for two years.
Legere attacked both AT&T and Verizon for practices that can mislead business customers and said T-Mobile's approach will eliminate haggling and shell games with sales reps and uncertainty over pricing. T-Mobile's simplified plans will cost 42% less than either AT&T or Verizon, he asserted, which should lead to company CIOs demanding that their AT&T and Verizon sales reps justify their higher costs.
"I can't imagine the conversations," Legere said with his trademark smirk. He urged CIOs to ask reps why AT&T and Verizon charge so much.
T-Mobile will also provide a specialized business care center for support around the clock. T-Mobile has the fastest 4G LTE service that now serves 275 million Americans, Legere claimed. That much network coverage should assure business customers that they can use the T-Mobile network widely for critical business needs, the company said.
By the end of the year, the LTE service should reach 300 million customers.
"We're driving the conversation about [an effective LTE] network, and we're at a great spot, but we're not done and not even close," Legere told reporters in a briefing that was webcast. He admitted that T-Mobile still needs to build out its LTE network for some rural and in-building areas that could serve mainly smaller businesses.
In addition to the basic 1GB of data offered per line, T-Mobile will offer another 2GB for $10 a line or unlimited data for $30 a line. There will also be a pooled data option for businesses that allows work groups to share data; that option starts at $4.75 per gigabyte for a 100GB minimum, but drops to $4.25 per gigabyte for ITB minimum.
Legere saved some of his most biting criticism for competitors who set up data buckets for business customers -- sometimes come with draconian penalties should a company exceed the amount of allocated data. "What the other guys do is sell a shared data bucket with punitive overage prices and if there's one bit over, the price could be double or four times," Legere said.
At T-Mobile, overages won't be penalized and each additional gigabyte will be charged at the same rate, he said. T-Mobile also won't charge data access fees atop of data charges, as some competitors do, he said.
Legere showed a slide in his presentation that said there is no contract for business customers and no overage charges, as well as global data service, Wi-Fi calling, free texting on flights and the ability to stash (or carry over) unused data each month. That's similar to the T-Mobile consumer data stash program.
Mike Sievert, chief operating officer for T-Mobile, estimated that an average American business could save $5,100 on 20 lines over two years with T-Mobile.
In addition to simplified pricing, the carrier will also give business customers with at least one line with additional paid data a free .com domain and website optimized for mobile viewing. T-Mobile is partnering with GoDaddy for the service. T-Mobile will also provide free .com Office 365 email addresses for every T-Mobile business line with additional paid data.
T-Mobile estimated the free services would normally cost $1,300 a year for a 20-person business. Almost half of American small business don't have a Web site, T-Mobile said.
Families of T-Mobile business customers can also save up to 50% on Simple Choice family plans. The savings will amount to $876 for a family with two lines over two years, T-Mobile said.
Legere and Sievert said they recognize that T-Mobile so far has only a small fraction of the $83 billion business voice and data market in the U.S. In 2014, AT&T and Verizon accounted for 72% of that market. For each, about 40% of their revenues came from business customers.
T-Mobile has benefited from aggressive pricing and service plans with consumers and is growing at a healthy pace that provides the platform to move aggressively now to go after business users, Legere argued. The move to Un-carrier for Business is "not a hail Mary pass," he said. "We are growing like crazy and and our EBITDA is expanding more than anyone in the industry. This is logical, planned growth."
T-Mobile now has 55 million customers and captured 100% of the industry growth in the postpaid segment in 2014, he said. Customer churn (also known as loss) dropped to 1.4% in the last quarter, down from 2.5% in 2012.
"We are moving to having more on every single facet that exists, including a bigger, broader, faster, wider network than AT&T and Verizon and that's what scares the hell out of them," Legere said.
Based on information on its website, T-Mobile's simplified pricing plan seems to be created primarily for small or medium businesses, with needs for up to 2,000 lines under the Simple Choice for Business plan.