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The lethal timidity of T-Mobile

Published Mar 27th, 2013 2:21PM EDT
T-Mobile UNcarrier Pricing

This was such a T-Mobile thing to do. Raising expectations for something revolutionary, trying to whip up feverish anticipation… and then delivering another $50 per month package deal. This is the same operator that has been vacillating between a value brand and a cutting edge alternative for years. The same operator who thinks that having a model who is a lookalike to a 47-year old Welsh star of musical theatre is a great way to connect with hip, young consumers.

There are now dozens of articles written about the mechanism of the new T-Mobile packages and what the savings would be for different types of consumers. What is immediately obvious is that the new deal structure is so complex it requires consumers to sit down and do comparative math between several mobile carriers. We also know that consumers don’t do that. They hate doing that. Which is why the new pricing approach will fail.

T-Mobile is a European company. It knows perfectly well what actually works when it comes to shaking up mobile status quo. Iliad launched a €20 monthly unlimited voice and texting package in France more than a year ago. That worked. The upstart clawed more than 5 percentage points of market share in less than a year. It forced the French giants operators into panic reprising moves. It changed the very dynamics of the French mobile market.

What T-Mobile is doing in America is dangerously, maybe lethally timid. The company is bleeding market share every month and risks losing its grip on high-end consumers completely. Consumers believe that T-Mobile has serious coverage issues and the TV ads featuring brunettes buzzing around in helicopters are not changing the perception. T-Mobile does not have a budget plan that would appeal to masses of penny pinchers. Offering a $50 monthly deal that effectively locks in consumers via phone price depreciation mechanism is a move that reflects fear of real change. AT&T’s (T) response was on the money: whatever.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.