Monday, August 25, 2014

U.S. Mobile Marketing War Might Last Another Year or Two

Once started, mobile marketing wars tend to gain momentum, at least for a while. The issue is how the structure of the U.S. mobile market might have changed, in perhaps a year or two, when the current war has ended.

In fact, as recently as the start of 2014, it would still have been possible to hear observers claim there was no price war going on in the U.S. market.

Even Verizon Wireless, normally loathe to engage in promotional efforts, has done so since Sprint started a new price attack of its own in the U.S. mobile market.

That is because the U.S. mobile marketing war might be depressing Verizon Wireless net new customer additions, suggesting that the T-Mobile US price attack has begun to poach accounts from carriers other than AT&T or Sprint.

Up until the first quarter of 2014, it was not so clear that the T-Mobile US growth was clearly coming at the expense of AT&T or Verizon. That might be changing.

In the second quarter, T-Mobile US booked virtually all net new prepaid account growth in the U.S. market, for example.

So it is that T-Mobile US has countered a Sprint promotion, which countered a T-Mobile US moves. The latest move by T-Mobile US is a new 2 GB increase in Long Term Evolution usage buckets for customers of “Simple Starter” plans.

T-Mobile US now provides “Simple Starter” plan customers to quadruple their data to a full 2 GB of LTE data, for just $5 per month. That plan was launched in May 2014 as an entry-level solution with unlimited talk and text, and 500 MB of LTE data for just $40.  

Starting September 3, 2014, Simple Starter customers can get 2 GB of LTE data for only $5 extra per month.

The move allows T-Mobile US to improve the value of its entry-level offer.
“Get Verizon’s $50 plan and use just one gig more data, and the price jumps to $65,” argues T-Mobile US CEO John Legere.

On the other hand, no marketing war lasts forever. The issue is what might happen to contestant market share or profitability and revenue, before the marketing war ends.

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