T-Mobile USA Goes to "No Contract" Pricing

T-Mobile USA has formally introduced its “no-contract” approach to mobile service pricing. T-Mobile USA says its “bold” approach means “T-Mobile is canceling its membership in the out-of-touch wireless club,” said John Legere, president and CEO of T-Mobile USA. “This is an industry filled with ridiculously confusing contracts, limits on how much data you can use or when you can upgrade, and monthly bills that make little sense.”

T-Mobile USA now says it will change all of that. Skeptics might disagree.

Sprint has emphasized “simplicity” for years. And one might argue that Verizon Wireless “Share  Everything” and AT&T “Mobile Share” use the same simplifying principles as T-Mobile USA’s “new” “Simple Choice” plans.

“Simple Choice asks customers two basic questions: How many lines do you need, and how much high-speed data would you like?” T-Mobile USA says. But some would point out that is precisely how the Mobile Share an Share Everything plans work, as well.

Nor is the shift away from contracts as dramatic as it might sound, for end users who really do not want to pay full retail price for their new devices.

T-Mobile USA is hedging its bets, by offering installment plans that have the advantage of allowing T-Mobile USA to post lower recurring costs of service for its usage plans, since the installment charges are “separate.”

Will consumers really care if the out of pocket monthly payments for T-Mobile USA service are marginally lower, in the case of services without subsidies but with an installment plan? In other words, will most consumers actually wind up saving money on a recurring, out of pocket basis?

If one assumes most consumers still are going to opt for device installment plans rather than buying their devices outright, the savings are relatively slight, on a recurring basis, for purchases involving high-end devices, though some could save money.

T-Mobile USA has a $60-a-month 2.5 gigabyte data plan is more than $300 cheaper over two years than an AT&T plan that offers 3 gigabytes and 450 minutes of talk time with the same device. For a user who opts for the installment plan, that works out to about $12.50 a month lower bills than for the rival AT&T plan.

There is an argument that T-Mobile USA plans will save more, compared to service from Verizon Wireless. A user buying that same T-Mobile USA plan, and using the installment plan, would save perhaps $20.83 a month, over two years, compared to a single-user Verizon Wireless plan with 2 gigabytes of data (though the Verizon Wireless plan also would offer unlimited talking and text messaging.

The point is that the actual differences in end user behavior, or the potential savings, might be more subtle than T-Mobile USA seems to suggest will be the case.

Wi-Fi Networks Change "Big Screen" Smart Phone Behavior

SCREEN SIZE VS DATA USE OVER A WI-FI CONNECTION

As screen sizes get bigger, people consume considerably more data, at least when connected using a Wi-Fi network, a study by OpenSignal suggests.The study also suggests that when connected using the mobile network, screen size actually does not have much impact on the amount of data consumed.

For example, data use over Wi-Fi doubles from a device with a six inches square surface area screen (like a Galaxy Ace) to a device with a nine inches square screen (like a Galaxy SIII).

On the other hand, there is only a weak correlation between screen size and data use over a mobile network connection. What this suggests it that people broadly use their mobile phones in the same way when on the move. Screen size does not change behavior.

Behavior does seem to change when larger screen devices have access to a Wi-Fi connection.  As screen sizes get bigger, people consume considerably more data.

Zynga, Pandora and Groupon are "Mobile Mostly"

You hear much talk these days of "mobile first," the strategy of building applications with a priority for mobile access, rather than "desktop."

But Zynga, Pandora and Groupon have achieved something virtually none of the other apps have done, and that is become "mobile mostly" apps whose usage is "normally" mobile. In fact, mobile use of Zynga and Groupon is at least double that of desktop usage. 

Media Metrix Multi-Platform Top 50 Properties February 2013 Total U.S. (Age 18+ on iOS & Android platforms for Mobile) Source: comScore Media Metrix Multi-Platform
		Unique Visitors/Viewers (000)
		Total Digital Population	Desktop*	Mobile**	Mobile-Only	Mobile Audience Incremental % to Desktop
	Total Internet : Total Audience	235,855	221,379	127,106	14,475	7%
1	Google Sites	228,084	196,782	107,604	31,302	16%
2	Yahoo! Sites	210,603	186,596	88,876	24,007	13%
3	Microsoft Sites	175,902	166,346	48,867	9,556	6%
4	Facebook	174,800	145,306	99,698	29,494	20%
5	Amazon Sites	147,031	115,363	74,122	31,668	27%
6	AOL, Inc.	130,619	115,202	54,010	15,417	13%
7	Glam Media	126,117	104,517	48,016	21,600	21%
8	Apple Inc.	115,920	75,358	62,104	40,562	54%
9	Wikimedia Foundation Sites	109,523	85,856	49,296	23,667	28%
10	CBS Interactive	100,772	85,783	34,029	14,989	17%
11	Turner Digital	98,311	81,501	38,424	16,810	21%
12	Demand Media	97,250	78,512	35,800	18,738	24%
13	eBay	84,677	65,764	41,355	18,913	29%
14	About	83,743	64,782	30,000	18,962	29%
15	Ask Network	81,430	69,355	20,933	12,075	17%
16	Comcast NBCUniversal	81,275	67,183	32,193	14,092	21%
17	Viacom Digital	79,966	70,446	20,194	9,520	14%
18	The Weather Company	76,642	56,120	37,368	20,522	37%
19	Pandora.com	65,142	23,035	51,977	42,107	183%
20	Gannett Sites	63,055	47,611	27,023	15,445	32%
21	Answers.com Sites	60,861	47,738	17,832	13,123	27%
22	VEVO	58,010	55,953	4,586	2,057	4%
23	Yelp.com	55,641	36,775	27,569	18,866	51%
24	Twitter.com	55,540	35,963	31,372	19,577	54%
25	craigslist, inc.	55,520	46,380	18,839	9,140	20%
26	Adobe Sites	54,840	40,984	19,810	13,856	34%
27	Federated Media Publishing	54,607	39,577	24,297	15,030	38%
28	Hearst Corporation	54,498	41,514	20,967	12,984	31%
29	Linkedin	54,071	45,699	14,978	8,371	18%
30	Wal-Mart	52,857	38,854	22,397	14,004	36%
31	WebMD Health	50,841	32,641	27,614	18,200	56%
32	NDN	46,262	46,260	N/A	N/A	N/A
33	Meredith Women's Network	45,533	32,253	19,771	13,280	41%
34	ESPN	44,759	30,348	27,735	14,411	47%
35	Tribune Interactive	44,618	32,991	17,982	11,627	35%
36	New York Times Digital	44,206	33,175	19,869	11,031	33%
37	YP Local Media Network	43,191	30,112	17,539	13,079	43%
38	Pinterest.com	41,210	26,972	22,994	14,238	53%
39	Disney Online	39,551	27,621	18,022	11,930	43%
40	Netflix.com	38,987	29,205	21,480	9,782	33%
41	Everyday Health	38,720	27,143	16,141	11,577	43%
42	Intuit	38,029	29,091	15,105	8,938	31%
43	Discovery Digital Media Sites	37,590	30,504	10,622	7,085	23%
44	Zynga	37,459	12,051	29,936	25,408	211%
45	Fox News Digital Network	37,340	29,829	15,276	7,512	25%
46	Scripps Networks Interactive Inc.	37,050	26,514	15,469	10,536	40%
47	Groupon	36,924	11,421	28,722	25,503	223%
48	Wordpress.com	36,846	27,964	11,976	8,882	32%
49	Target Corporation	36,061	23,043	18,028	13,018	56%
50	Time Warner (Excl. Turner/WB)	35,142	25,729	13,693	9,413	37%

*Note: Desktop includes audience reached via video and will therefore differ from standard Media Metrix rankings
**Mobile includes smartphone and tablet platforms

Will Move Away from Subsidies Really Help T-Mobile USA, or You?

Will consumers really care if the out of pocket monthly payments for T-Mobile USA service are marginally lower, in the case of services without subsidies but with an installment plan?

Put another way, will consumers actually even save money on T-Mobile USA's new "no contract" plans?

The answer might well be that most consumers will not save much money, if any money.  

In fact, some consumers might even wind up paying less, out of pocket, with a contract plan. 

If one assumes most consumers still are going to opt for device installment plans rather than buying their devices outright, the savings are relatively slight, on a recurring basis, for purchases involving high-end devices.

T-Mobile USA has a $60-a-month 2.5 gigabyte data plan is more than $300 cheaper over two years than an AT&T plan that offers 3 gigabytes and 450 minutes of talk time with the same device. For a user who opts for the installment plan, that works out to about $12.50 a month lower bills than for the rival AT&T plan.

There is an argument that T-Mobile USA plans will save more, compared to service from Verizon Wireless. A user buying that same T-Mobile USA plan, and using the installment plan, would save perhaps $20.83 a month, over two years, compared to a single-user Verizon Wireless plan with 2 gigabytes of data (though the Verizon Wireless plan also would offer unlimited talking and text messaging. 

Still unknown is whether bring your own device trends will get a boost, in addition to a possible shift of end user demand to installment plans or lower-priced devices. 

Vodafone has had unpleasant experience with a shift to "no device subsides" in Spain, leading the firm to reverse course. 

So if you are expecting T-Mobile USA to "disrupt" the U.S. market, you are most likely in a for a let-down. Many of us think the real potential disruption could come from a Softbank-lead Sprint, one way or the other.

Do you really think a "Google" mobile service would fail to be disruptive?