CFO: T-Mobile “pivoted away” in promoting unlimited data [UPDATE]
Update: A T-Mobile spokesperson has clarified the suggestion that CFO Braxton Carter was announcing the end of unlimited data plans on the carrier. He is, in fact, referring to the “limited time” offer of the unlimited data family plan (wherein the first three lines cost $50 per month with the fourth line free). We went back and traced the question asked to Carter:
On the pricing front, so […] one of the bull cases for wireless more recently has been the ability to monetize accelerating data traffic in a paper-use type model. If we think about pricing, about how competitive it’s been of late — operators focusing more recently on unlimited pricing, uh, I believe T-Mobile has a promotion going for four lines for $150. How do operators benefit from rising traffic when pricing’s deteriorating? Are there costs per unit benefits or offsets we should consider?
While that promotion will be around only for a “limited time,” Carter’s generalizations in regards to Binge On and the price increases on the unlimited plan remain intact. He did not explicitly suggest the ending of said plan. Pocketnow regrets the error.
Our original story is below.
Unlimited has been getting a terrible rap in financial terms lately, at least in terms of being a constant peg of service. More recently, we’ve seen the gimmick-ization of all-you-can-use data plans in association with other promotions like what AT&T did with bundling DirecTV packages. It looks like T-Mobile may be doing the same which may turn into the phasing out of its unlimited data plan.
In addressing investors at a Deutsche Bank conference, CFO Braxton Carter noted a couple of Un-carrier campaigns to come this year and bragged about postpaid subscriber growth and retention. But sometimes, when you’re ahead in the game by so much, it could make sense to cut back where you can to maximize growth. Enter the zero-rated video streaming scheme, Binge On.
In regards to our unlimited promotion, it is a promotion — it’s very short-time. We pivoted away from using unlimited as our primary promotion mechanism in the prior year. And part of what we did with Binge On was another substantial increase in the price of unlimited.
Braxton points out two increases totaling a net rise of $25 in the price of the unlimited plan over the past couple of years — though they did come with more hotspot benies and price hikes on the other tiered packages as well.
But the scheme that gave users a free pass on data for streaming video from certified vendors — the one that got a few dozen truckloads of slack before the carrier finally relented on some of the program’s tenets — had more than a price increase attached. We also saw an unrecognized end-of-life tag.
And it may all be written-off as a difference in perception about how customers are served data.
With Binge On, we have seen no difference in data consumption with our unlimited customers, but we have seen not an insignificant increase in the data consumption on the part of our bucketed data customers. So, another part of the equation is that it’s less costly […] to have that type of promotion in the marketplace.
Being able to drive consumption growth in a lot of bucketed consumers while patting down accounts that use 15, 50 or even 100GB a month does help quiet the network out a bit.
Even though T-Mobile promotes its services in national advertising and serves 97 percent of the number of LTE subscribers that Verizon does, it’ll need to expand into places it hasn’t been — sorely seen in the spottily-covered Pacific northwest. Braxton says that it’ll spread out its network by another 17 percent over the next couple of years.
Controlling how consumers use your product in order to serve a better product to them is as valid a strategy as doubling fines in road work zones. We’ll have to see, though, if the alternates prove more appealing while growing pains continue to occur.