T-Mobile Launches $50 Unlimited Retention Plan
According to RCR News (subscription may be required to read), T-Mobile is now offering a $50 unlimited calling plan to all existing customers who have been with them for 22 months or longer. No additional contract extension is required. Text messaging is about $5, yielding a total of $55 vs. the current $100 for the unlimited T-Mobile plan (already includes text). Additional lines part of a family plan cost just $40 month. In a separate promotion targeted at gaining incremental customers, T-Mobile will give a $135 credit to any customer bringing a new line of service to their account from another carrier.
MyRatePlan Analysis: Fairly aggressive moves from the country's 4th largest carrier, perhaps showing that T-Mobile's strategy of low prices is no longer enough to drive desired growth in a slowing market. $50 matches unlimited prepaid offers from Boost Mobile, Cricket and MetroPCS, so that may explain why they chose the price point. It may also be indicative of where they think unlimited voice pricing is going in the next couple years.
In the short run, revenue risk isn't quite as high as it seems: Existing T-Mobile unlimited plans are fairly recent, so no subscribers are at the 22 month mark yet. Most T-Mobile customers are on voice plans of $40 or less, so revenue may actually climb slightly from these customers. To the extent that the loss of customers (churn) declines, the program may actually be positive for T-Mobile's bottom line. For the other plan, acquiring a customer for $135 plus a phone discount is probably no more expensive than current acquisition costs. There may be some risk on the cost/capacity side (if people suddenly start using a lot more minutes), but that is likely a minor issue.
It will be interesting to see what the competitive response to these programs is, if any. More importantly, how much longer will the industry avert a full-blown price war?