T-Mobile USA CEO John Legere on stage in New York, introducing Uncarrier 9.0. Image source: T-Mobile.
It's never boring when T-Mobile USA rolls out its "Un-Carrier" brand of policy changes. CEO John Legere is a born showman, and the company's underdog position versus telecom giants AT&T and Verizon Communications gives him plenty of fun material to work with.
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Last week, T-Mobile introduced its ninth Un-Carrier program, with all the media bluster you'd expect from Legere. This time, the release was subtitled as "Un-Carrier for Business," which is a first for this series.
"We're going to do for businesses, what we've already been doing for consumers," Legere said in a prepared statement. "Eliminate pain points and force change."
What's new? Specifically, T-Mobile claims that owners of small and medium businesses hate to haggle and negotiate with the carriers for their wireless communications needs. "It's no wonder over 70 percent of U.S. businesses say they're sick of the game and want simple, transparent pricing," the press materials said.
So T-Mobile followed in the footsteps of its earliest consumer-grade Un-Carrier plans by bringing all business customers to a single rate plan. "Our best price is our only price," T-Mobile claims, though that statement does come with some caveats.
Starting with a minimum of 10 lines, T-Mobile will charge $16 per line, per month. But it's a step-scaled pricing plan, so you qualify for $15 per additional line when you sign up for 20 access lines. And for larger operations, the bill drops to $10 per line when you need more than 1,000 of them.
To be clear, the adjusted rates don't move the entire plan down to lower prices. If you're ordering 1,100 phone lines, for example, you'd pay $16 for the first 20 lines, $15 each for the next 980, and $10 per line for the last 100 units. The grand total for these 1,100 lines would land at $16,020 per month, not the $11,000 you'd get if every phone came with a $10 monthly charge.
So it's not exactly a model of no-brainer math, but still a big step ahead of the big guys.
John Legere in the act of throwing darts at AT&T and Verizon. Image source: T-Mobile.
The T-Mobile business plan also comes with unlimited calling and text messages, plus 1 GB of monthly data access. Customers can buy additional data, either in a shared pool between all devices or on a phone-by-phone basis. Other than that, business owners don't have to worry about additional charges, special discount programs, or uniquely negotiated deals.
By contrast, Verizon sets different plan rates based on the type of phone your business account orders, sometimes charges for airtime minutes, and offers a dizzying array of slightly different plan options.AT&T likes to "tailor" its business-grade wireless deals to your exact company size,to the industry you work in,and to what kind of broadband Internet plus digital TV deals you'd like to bundle in.
Against that backdrop, T-Mobile's far simpler business-grade catalog does look like a breath of fresh air. Moreover, T-Mobile claims that a typical small business with 20 wireless users could save over $5,000 by selecting the Magenta network over Ma Bell or Big Red.
The business impact T-Mobile is launching this simpler and apparently cheaper business plan from a solid underdog position. As Legere noted, the market for business-class wireless services adds up to $83 billion of annual sales today, and these sales account for over half of AT&T's and Verizon's overall wireless revenues.
T-Mobile accounts for just $4 billion of that enormous total.Business accounts make up just 13% of the company's wireless sales. In other words, John Legere sees an opportunity to steal customers in what's virtually virgin territory for his own company.
It remains to be seen whether corporate customers are ready to accept T-Mobile's business proposition. The company still lags behind Verizon and AT&T in most network quality studies and is trying to overcome a lack of wireless spectrum licenses with a heavy reliance on Wi-Fi calling. Work smarter, not harder and all that.
Consumers are certainly flocking to T-Mobile's Un-Carrier solutions, and the company is currently growing faster than all of its national rivals. But IT directors and human-resources departments are holding the reins this time and might prefer high-quality services over innovation and low prices.
Expect more of these corporate-class Un-Carrier announcements in 2015 as T-Mobile and Legere try to figure out how it can appeal to business customers. Meanwhile, Verizon and AT&T could very well follow suit by simplifying their own business-grade wireless services.
What does this mean for investors? And so it goes. In a seemingly never-ending quest to get the upper hand on the industry's true giants, T-Mobile introduces another perfectly obvious business practice that may indeed become an industry standard very quickly. These micro-revolutions most certainly keep AT&T and Verizon on their toes, but they rarely give the little guy any sustainable advantage.
T-Mobile may be a winner in the long run, but the jury is still out. Add the stock to your Foolish watch list to keep a close eye on the news.
The article What's the Big Deal With T-Mobile USA's "Business Un-Carrier" Plan? originally appeared on Fool.com.
Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Apple and Verizon Communications. The Motley Fool also owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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