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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T-Mobile Tepidly Ventures into Subsidy-Free Territory

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