T-Mobile spent the better part of the last decade as an also-ran. Slinking in the shadows of AT&T, Verizon, and Sprint, the smallest of the “big four” American carriers was never quite able to muster the muscle of its competitors. Its inability to carry Apple’s iPhone never helped matters, and after AT&T failed to buy it up last year, the Deutsche Telekom subsidiary seemed more cast out and dejected than ever.
But an infusion of fresh executive blood – and the new ideas that go with that – could turn T-Mobile around. Freshly installed CEO John Legere and Chief Marketing office Mike Sievert plan to reimagine T-Mobile as the “Uncarrier;” the rebel little guy who defies the rules written by his entrenched, bureaucracy-locked competitors. We spoke with Sievert, the man responsible for curating T-Mobile’s new image, to find out how it intends to live up to its ambitious new self-coined title.
The problem with carriers
As a veteran of Microsoft and Qualcomm, Sievert might seem like the last person to approach the industry from a new perspective, but he was quick to criticize the status quo.
“We don’t think the consumer is best served by a mentality of an industry that has, for a long time, been dominated by utility companies that have utility company thinking,” Sievert says. Think contracts. Rigid rules. Thick layers of bureaucracy. But where there are problems, there are opportunities. Sievert believes T-Mobile has “a real opportunity to be disrupters.”
“We call it the Uncarrier strategy,” Sievert told us, as he explained T-Mobile’s new initiative to win back customers by rewriting the rules of the wireless carrier game. Smartphone subsidies will disappear, along with the contracts that went with them. So will hard data caps, and the expensive overages that kicked in when you accidentally rolled over them. The message: Pick any phone you want, use it as much as you want, quit whenever you want.
An Uncarrier way of thinking
This ideology might cut into the lucrative data plans that have kept competitors flush with cash, but Sievert believes that liberating consumers will also endear them to the network that has struggled to rise above fourth place. T-Mobile, he says, wants to “focus on what consumers want: a low, fair, simple price you really do understand; great access to the most amazing devices on the market; the ability to trade up and be treated fairly when its time to upgrade; and the ability to enjoy the services we sell, like an unlimited network offering that doesn’t require a contract.” This was not your average elevator pitch.
Like CEO John Legere, Sievert isn’t afraid to knock around competitors in effort to illustrate how T-Mobile will set itself apart. AT&T and Verizon’s shared data plans with hard caps are a particularly pointed topic. “Both of these big competitors of ours have fantastic margins. Man they are making money hand over fist, and these shared data plans are contributing to that.”
According to Legere, the strategy of pooling data helps carriers minimize bandwidth and maximize revenue, but works poorly for customers. “People don’t want to feel like they are on the clock,” Sievert said. “Data is everything.” Data plans, he claims, will be a game changer for T-Mobile; customers want unmetered data. “We believe the vast majority of consumers want unmetered and unlimited voice and text, and you will see us moving toward that.”
T-Mobile’s data plans will only differ in the amount of high-speed data customers receive. Less-expensive plans will put the brakes on a customer’s speeds after they use a certain amount of data, while premium plans will offer truly unlimited high-speed data for those who are prepared to pay for it. Users who go over their high-speed limit will be able to add on more data for the same rate without an overage fee. T-Mobile’s future plans will be centered on these data plans, and they won’t necessarily come with two-year contracts.
“Contracts should be something consumers sign when they get a benefit, not when they’re forced to,” Sievert says. “It’s just a philosophy of ours.” While he wouldn’t hint at anything specific, we wouldn’t be surprised to see some sort of offer or promotion tied in for those willing to make one or two-year agreements.
What’s in store for the future
Beyond its current plans, Sievert was optimistic that finally landing the iPhone this year will be a boon for the carrier that “arguably has one hand tied behind its back” without it. “We’re very excited to be partnered [with Apple] and to be launching products with them in 2013,” Sievert said. That’s the best evidence we have so far of T-Mobile’s intention to carry the iPhone 5, or perhaps iPhone 5S. It’s going to happen, and maybe soon.
VoLTE is also in the works, a technology that offers better audio and battery life for smartphones. MetroPCS had been busy testing up until it was bought by T-Mobile. “We don’t have any announcements to make, but I will say it’s exciting technology … it’s turning out to be a nice consumer experience, and has some great network utilization benefits,” Sievert says. It certainly seems T-Mobile is planning to move forward with VoLTE sooner, rather than later.
Of course, contract-free plans, subsidy-free phones, unlimited data, and a huge LTE roll-out all sound great, but how does T-Mobile plan to actually deliver? “We’re now in the process of going to do the doing,” said Sievert.
It has its work cut out for it. T-Mobile’s 4G rollout calls for reaching 100 million people by mid-2013, and “probably 200 million” by the end of the year. While that might sound ambitious, much of T-Mobile’s backhaul – the hard connections between cell towers – has already been upgraded, thanks to an initiative it started all the way back in 2007. That means while towers need new equipment, the laborious process of replacing hard lines between them has already been completed.
Even with the promise of T-Mobile’s new Uncarrier philosophy, the carrier has a lot to prove before it truly delivers what it claims. While Mr. Sievert emphasized the idea of T-Mobile “putting the customer first,” it faces innumerable challenges before it comes even close to fruition. What matters at this point is T-Mobile’s ability to stick to its word, accomplish its LTE expansion, and start selling the iPhone. We like what T-Mobile says it can be, but it’s going to take a lot before it can prove itself worthy.