Jeff Gelles: T-Mobile makes two more big moves

T-Mobile will eliminate data charges for people using many music streaming services.
T-Mobile will eliminate data charges for people using many music streaming services. (PATRICK T. FALLON / Bloomberg)
Posted: June 20, 2014

T-Mobile has trumpeted itself since last year as "the uncarrier" - fourth place in customers, but first among anyone who hates the big guys' "gotcha" practices, such as long-term contracts or tricky data-roaming charges that can cost people thousands of dollars when they venture overseas.

Now, T-Mobile is challenging Verizon and AT&T on two more counts. It is eliminating data charges for music streamed via services such as Pandora, Spotify, and Rhapsody. And, starting Monday, in league with Apple, it will offer anyone who wants to test its network a seven-day free trial on a loaner iPhone 5S. All you need is a credit card.

T-Mobile's colorful CEO, John Legere, announced his latest assault on what he calls wireless "pain points" at a news conference Wednesday night in Seattle. I spoke beforehand with one of his lieutenants, Vice President Marty Pisciotti, to ask about T-Mobile's new painkillers - each bound to appeal to particular kinds of customers as T-Mobile, with nearly 50 million, goes up against carriers more than twice its size.

To his credit, Legere is forging forward despite rumors of a potential merger with the No. 3 carrier, Sprint. That deal would be unwelcome news for competition and consumers, and we can only hope federal antitrust officials agree. If Legere's uncarrier campaign has proven anything, it's that in wireless pain points, T-Mobile has given a name to a big, juicy target.

It painted its first bull's-eyes on contracts with costly termination fees, and on jaw-dropping international roaming charges with its clever "Where's Jeremy?" ad campaign. While Jeremy trekked, his parents worried about going bankrupt and begged him to shut off his phone.

Pisciotti says T-Mobile's confidence in its fourth-generation LTE network back at home is behind its latest efforts.

"People don't know how much work we've put into our network. We're really proud of it," he says. With the new program - you can sign up starting Monday at - he says the message is: "Don't just believe us. Try it."

The aim is to cut some of the risk from buying wireless service. Even without contracts, new customers typically have to invest in phones that may not work on another network.

"With cars, you can test-drive them. It's really ridiculous with wireless service - you have to buy blind," Pisciotti says. "We're going to launch a way where people can test-drive our network."

Why the focus on music streaming?

"Our competitors have used this as an opportunity to put the screws to customers and charge them overages," Pisciotti says. He says many people who love music don't use their phones to listen, for fear of data costs.

T-Mobile is starting with Pandora, Rhapsody, Spotify, iHeartRadio, Slacker, and iTunes Radio, and says it will add more if customers request them.

One question about T-Mobile's plan is whether it violates net neutrality, because it treats music services' data differently than data from other websites and apps. Even before the courts threw neutrality rules into limbo, though, regulators had given wireless carriers extra leeway. The good news is that chief marketing officer Mike Sievert said there was "no commercial relationship between these services and T-Mobile." In other words, T-Mobile isn't charging the services toll to reach its customers.

It's clear that T-Mobile's attack on pain points has helped some customers and lured new ones - such as Jetscape, a Florida aircraft-leasing company with offices in Malta and Germany, and some employees who travel 200,000 miles a year.

"Our most critical issue is that when one of our executives gets off the plane, his phone needs to work," says Jetscape vice president Mark Balentine. By that measure, he says, T-Mobile has "performed flawlessly."

But where T-Mobile stands out is cost. "We were running $7,000 to $10,000 per month in roaming charges with AT&T," he says.

T-Mobile's Legere offered a salve for that pain, and wireless customers are better off for it.

215-854-2776 @jeffgelles

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