T-Mobile's global data plan: It's all about big business
The allure of free international data may appeal to heavy travelers, but T-Mobile is really targeting businesses looking to save a buck.
With T-Mobile's newly, the carrier is hoping to turn a weakness into an advantage.
That weakness -- the lack of business users and heavy travelers wealthy enough to pay those hefty roaming fees -- is exactly what allowed T-Mobile to offer free, unlimited data outside of the US, according to CEO John Legere.
T-Mobile on Wednesday night announced the global data roaming feature at a splashy event in Manhattan's Bryant Park, which was decked out in magenta lights and featured performances from DJ Swizz Beats and singer Shakira. The park was packed with customers as the company loudly attempted to keep the "Uncarrier" momentum going.
While average Joe customers were at the event, the focus on these plans will be squarely on winning over big business customers. Legere talks often about eliminating "pain points," and there's not a lot that's more painful than the pricey cell phone bills that business travelers rack up.
"It's a good step to get the attention of a market that has largely ignored T-Mobile's presence and which spends a lot on their monthly phone bills," said Walt Piecyk, an analyst at BTIG Research.
The initial reaction from everyone is: how the heck did T-Mobile pull that off? Well, there are some limitations to the service. While the data is unlimited, the connection rate is painfully slow when stacked up against an LTE or even HSPA+ experience. It's essentially a 2G connection that Chief Marketing Officer Mike Sievert said would be around 128 kilobits per second -- or roughly twice the speed of an old dial-up modem.
"You can't have it both ways," said Maribel Lopez, an analyst at Lopez Research. "There's no fast, dependable service that's affordable."
Customers can pay for "speed boosts" that range between $15 and $50 that T-Mobile said will partially offset the disappearing roaming fees.
Lopez said called the global data-and-text plan a "big deal" for businesses looking to save a little money.
Legere, meanwhile, was quick with the stats. Over a third of medium to large business say they spend over $1,000 a month for employees who travel internationally, with 15 percent saying they spend between $2,500 and $3,500 a month.
"This is a no brainer," he said, adding he expects rapid growth in the business arena.
Legere also said this plan will irritate the bigger carriers, which count on these hefty roaming fees for revenue, something he said he loved to see.
Representatives from AT&T, Verizon Wireless, and Sprint all declined to comment.
The knock on T-Mobile and a reason why businesses have tended to shy away from the carrier has been its lack of coverage and poor service. But the carrier has worked to improve the service and has. Even critics admit its fallback network, which uses a technology called HSPA+, is speedier than the competition.
While T-Mobile has made progress catching up to the Big Two, AT&T and specifically Verizon still have a lock when it comes to the perceptions over network superiority.
But perception often lags behind reality, and perhaps the big savings that T-Mobile is promising may have some businesses taking a closer look at the carrier.
"Its still a fundamental issue for anyone enabling their business with mobile," Lopez said.