T-Mobile is touting a new deal that eliminates international roaming charges in more than 100 countries.
The move is part of the network operator's continuing assault on the cozy (and highly profitable) practices of US mobile providers.
"The cost of staying connected across borders is completely crazy," said John Legere, president of T-Mobile US in a typically pugnacious statement.
"Today's phones are designed to work around the world, but we're forced to pay insanely inflated international connectivity fees to actually use them. You can't leave the country without coming home to bill shock. So we're making the world your network - at no extra cost."
From October 31, T-Mobile customers on its Simple Choice plan will have data and text messages charged at the local US rate when traveling abroad. In addition, charges for international calls to mobiles phones overseas and within the US to the rest of the world will be capped at no more than 20 cents per minute, and calls to overseas landlines will be free under a new $10 per month Stateside International Talk & Text plan.
European readers will be looking slightly smug at this point, after the EU's digital tsar 'Steelie' Neelie Kroes forced telcos to cut roaming charges to a pittance and told the telcos to get used to the idea. In America such interference is seen as socialism, and Verizon actually went to court to fight an FCC ruling that it should charge "reasonable rates" for roaming.
"It doesn't have to be this way," Legere said. "The truth is that the industry's been charging huge fees for data roaming. But what's most surprising is that no one's called them out — until now."
That's slightly self-serving – there have been numerous reports pointing out that both AT&T and Verizon use data caps, locked-down handsets, and high prices to constrain use and boost profits. As a result average revenue per user for the two companies have risen sharply, but visitors to the US are often shocked at how much consumers over here are charged for their mobile calls.
According to T-Mobile 40 per cent of Americans overseas turn off data altogether when leaving their homeland, and another 20 per cent would do so if they knew how. That said, only about a third of the US population owns a passport and only an estimated 5 per cent of them actually leave the Land of the Free every year, so T-Mobile won’t be taking too big a revenue hit, but the move is more about tactics.
The Uncoupling strategies pursued so far has made T-Mobile the first US major mobile provider to eliminate two-year phone contracts (sort of) back in March and the announcement in July that customers can upgrade their phones every six months if they pay a small fee.
The changes have forced the two behemoths of the US mobile market, Verizon and AT&T to amend their strategies and prices in response, albeit with mixed results. Both currently make serious coin from the roaming charges and more than a few users have been hit by massive bills after either leaving roaming on while abroad or not understanding the charging system – leading to bill shock.
The goal of Uncoupling for T-Mobile is to build a viable business in the US after Deutsche Telecom's strategy of trying to sell off its American subsidiary to AT&T failed. The US authorities blocked the deal on the grounds that reducing the number of mobile telcos further would harm competition, leaving just three national carriers.
In response T-Mobile appointed John Legere and CEO and he has pursued an aggressive growth strategy. He bought up mobile minnow Metro PCS to expand its coverage, has been investing in spectrum, rolling out a nationwide LTE network, introduced Linux phones, and is considering buying third-place mobile provider Sprint.
The strategy appears to be working – the company added over a million customers last financial quarter and is getting taken increasingly seriously by the competition. All eyes are now on Verizon and AT&T to see if they will react to T-Mobile's move. ®