T-Mobile "Tablet Freedom" Plan Shows Tablet Impact on Account Growth

T-Mobile US has launched another attack in the U.S. mobile market, aiming this time at connected tablets by allowing T-Mobile US customers to add a mobile-capable tablet to a postpaid voice plan for free. The plan gives customers 1.2 GB of free 4G Long Term Evolution data usage every month in 2014.

Verizon Verizon quickly responded, allowing tablet owners to add a connected tablet, with a gigabyte of free monthly data, on “More Everything” shared access plans.

Operation Tablet Freedom also now is selling mobile-capable tablets for the same price as Wi-Fi-only models, when T-Mobile US consumers also activate a new postpaid mobile Internet plan for a new tablet.

Voice customers adding the 1GB tablet plan for free for the rest of 2014 also fully qualify for these reduced prices, T-Mobile US says.

Also, T-Mobile US also will pay any early termination fees when users switch to T-Mobile US.

The point is that tablets are driving line growth in the U.S. mobile market, especially for T-Mobile US, and likely AT&T and Verizon Wireless as well.

If T-Mobile US and Verizon Wireless each gain nearly a million net customers in a quarter, AT&T adds half a million and Sprint loses half a million, in a context where 90 percent of net adds must come from some other carrier’s market share, the numbers do not add up.

Simply, there are more accounts being added than are possible, counting only phones.

What seems to be happening is that most of the net new additions are driven by tablets and other machine-to-machine connections of various types, such as alarm connections.

Analysts say AT&T has lost some phone accounts to T-Mobile US. Of 551,000 net postpaid wireless subscribers AT&T added in the second quarter of 2013, for example, 398,000 were for tablets.

UBS estimates 160,000 were for other connections, such as home security or wireless home-phone service. AT&T lost a net 7,000 mobile-phone customers.

UBS analysts also expected net additions of 350,000, virtually all from tablet connections, with 200,000 other net new connections canceling out a net loss of 200,000 phone subscribers.

Indeed, connected devices (tablets, principally) drove net mobile additions at AT&T during the third quarter of 2013.

AT&T added nearly one million net subscribers, including 63,000 mobile postpaid accounts. AT&T also added 192,000 prepaid accounts. But connected device net adds were 719,000, or 73 percent of net additions.

In the fourth quarter of 2013, AT&T likewise added  a net 566,000 customers on a contract, with 440,000 net new tablet customers.