May 5, 2022
T-Mobile US is making a renewed push into 5G-based fixed wireless services for home broadband, in the process hitting out at the country’s established ISPs in its own unique style.
The US mobile operator on Wednesday launched a new fixed wireless service for consumers, encouraging them to ‘cheat on’ and ultimately ‘break up with’ their fixed Internet provider, promising to pay early contract termination fees and to allow customers to lock in prices. It also presented a new business offer and added to its portfolio of FWA kit for business customers, but much of the hype was around its consumer play.
In a nutshell, T-Mobile believes Americans are getting a raw deal from their fixed ISPs, in terms of price and customer service, and is seeking to poach as many fixed broadband customers as it can. It acknowledges that moving fixed broadband supplier can be tricky due to contract lock-ins, lack of choice of provider – depending on where you live, presumably – and difficulties associated with installing a new broadband service, such as booking engineer visits and so forth. Naturally, it believes its 5G-based Internet Freedom plan is the cure for all ills.
On paper it looks pretty compelling, particularly given that T-Mobile has pledged to pay out up to $500 to buy customers out of their previous contracts, and is allowing them a 15-day trial period before committing to the switch to make sure it works for them.
At $50 per month it’s not super-cheap, but it stacks up pretty well in the notoriously expensive US broadband market.
Last summer S&P Global put the average monthly cost of a household broadband service in the US at $57, but that figure covers both cheaper fixed wireless and DSL plans as well as higher cost fibre packages. Indeed, the average price for a fibre service was $70, while cable came in at $62.
Interestingly, T-Mobile is not sharing specifics on speed, the service naturally being subject to the availability and performance of the 5G network, but it is clearly pitching Internet Freedom at the higher end of the market.
Perhaps more importantly than sticker price in these uncertain economic times, T-Mobile is offering a price lock-in. Customers will pay $50 per month for as long as they are a customer, the telco says.
All of which indicates the strength of T-Mobile’s desire to steal customers away from the broadband establishment. But it will have its work cut out. Statistics show that the big fixed broadband providers have had a good run over the past couple of years.
New data published by Leichtman Research Group shows that the biggest cable and telco providers in the US – which account for 96% of the market, incidentally – together added 2.95 million broadband customers last year. That’s a decline compared with the Covid-fuelled high of 2020, when net adds came in at 4.86 million, but an increase on each year in the 2016-2019 period.
The bulk of the growth came from the big cable operators, led by Comcast and Charter, but the telcos witnessed an overall increase too and, importantly for their ARPUs, saw strong growth in fibre net adds; the telcos together signed up 1.8 million new fibre customers in 2021, up from 1.64 million the previous year.
Nonetheless, T-Mobile remains insistent that US consumers and businesses would be better off with 5G broadband.
“Broadband customers are the least satisfied in America – the fees, the contracts, the price hikes, the terrible customer service. It’s ridiculous, and it looks a lot like the wireless industry a decade ago,” said T-Mobile CEO Mike Sievert. “Today, that all starts to change because the Un-carrier is here to disrupt broadband for good.”
That’s fighting talk. Let’s see how the battle plays out.
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