T-Mobile's Even More Plus Plan Is a Strategic First,

But Leaves Flank Open to Bolder Competition

During the last week of October 2009, T-Mobile became the first

Tier 1 mobile operator to launch a significantly new alternative to

the conventional options of contract and prepaid plans. The launch

of the Even More plans opened up the entire T-Mobile device

portfolio to customers on both a contract and a month-to-month

basis. The key difference is that for the month-to-month option,

called Even More Plus, customers will need to buy an unsubsidized

device or provide their own compatible device. T-Mobile is taking

advantage of the currently low cost of capital to offer zero percent

financing for unsubsidized devices to be paid over a 20-month

period. This is a well-designed approach to achieve lower monthly

plan costs while also indirectly tying the month-to-month

customers to a longer, consistent relationship to keep churn at bay.

As outlined in Exhibit 1 below, despite these significant points of

progress, the new plans haven't completely shed the complexities

and ambiguities that plague U.S. mobile service plans. Without

retooling these aspects of the plans and providing clearer overall

value, it is unlikely that the existing approach will gain much

traction with a broad set of consumers.

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