Recently, T-Mobile made a lot of noises on their ‘Un-carrier’ campaign. You can do the math yourself, but after some thorough calculations, the TCO (Total Cost of Ownership) is not so different from other domestic carrier’s offerings. Yes it’s cheaper, but not 1 and 10 cheaper, more of a 8 and 10 cheaper. But why would T-Mobile bother to make a big deal of this ‘un-carrier’ thing instead of promoting the ‘cheaper’ part of their new plans? In my opinion, it’s a smart and subtle PR play to promoting ‘cheap’ without damaging their image. The carefully planned campaign serves three purposes:
1. Hiding the ‘Cheap Prepaid’ Label
T-Mobile recently merged with MetroPCS, which is a sizable prepaid carrier. T-Mobile itself bet pretty heavily on prepaid too. Acquiring MetroPCS will definitely strengthen the prepaid part of their business, even pushing their entire business to that direction. BUT, and this is a big ‘but’, T-Mobile will NEVER allow themselves to be labeled as ‘cheap prepaid carrier’. Call it pride , call it denial, they want to remain their ‘top-tier’ image at all cost, even when their entire business is slipping deeper and deeper into the ‘prepaid’ zone. By demanding other top-tier carriers to ‘stop the bullshit’, they picture themselves as the savior, offering a way out of others’ ‘contract tyranny’. They are not being cheap, they are actually freeing the end users from the ‘2 years contract’ shackle and charge less doing so! All the public attention will be on whether the 2 years contact is a good thing or a rip-off, instead of whether T-Mobile is finally go ‘prepaid’. Smart move!
2. Severing ‘cheap’ label from ‘Prepaid Model’ and rebrand it as ‘Freedom for User’.
Everybody knows it, nobody wants to admit it. In US cellphone market, ‘prepaid’ equals ‘cheap’. It suggest inferior service, fewer choices on high-end smartphones, and bottom feeder ‘dirt-cheap’ handsets. The thing is, this is only the case within US market. In Europe where T-Mobile’s mother company is, and most of the Asian countries, prepaid model is the main stream, comes with the best quality service package and top-of-the-line smartphones. If T-Mobile could change people’s perspective on prepaid and stop them from thinking ‘prepaid’ as the synonyms of ‘cheap’, it could fundamentally change how the carrier game is played in US market, and T-Mobile is the best positioned to play the new game. It’s a long shot, but it’s also a big shot.
3. ‘Financing you Phone’ avoid upfront big payment, yet leverage people’s purchasing habit.
For those people buying a new iPhone 5 and don’t want to pay the full price upfront, T-Mobile offered a 2 years financing plan that user can get the phone with $99 down payment a $20 monthly charge. It might sounds like the same ‘2 year contact’ with what other carriers is offering, but there is a big difference. The bank not the carrier is offering the financing plan with credit check, which users in US has long developed trust with. People feel way more comfortable getting into a loan situation with banks than carriers. Comparing to a 20 years $1000/month home mortgage, a $20/month 2 year one is hardly a thing! By offering the financing plan, T-Mobile avoids the downside of big ‘day one investment’ for prepaid model, but still remains in safe distance with the ‘2 years contract’ model which they so fiercely claiming against.
I have to say this is very well-played by T-Mobile’s PR team. How well or how fast people could accept the ‘prepaid’ model as the new main stream remains to be seen, but it’s good to see one of the top-tier carriers making a strong first step to this direction.