T-Mobile, the U.S. arm of Deutsche Telekom and the No. 4 wireless carrier in that country, announced last night a novel new plan that gives customers unlimited global data and texting "at no extra charge."
"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," chief executive John Legere said. "You can't leave the country without coming home to bill shock."
Here's the thinking: Americans take about 55 million trips to destinations outside the U.S. each year. (About a third of all Americans carry a valid passport.) If U.S. customers use their phones abroad the way they normally do at home, their costs would run to $1,000 per day. So they don't: 40 percent of customers turn off data completely.
T-Mobile wants to crack this market, a mix of business and recreational travelers. Though the company is staking moral high ground on the issue—"The industry's been charging huge fees for data roaming, but what's most surprising is that no one's called them out," Legere said, feigning incredulity—it's really using it as a market differentiator compared to the Verizons and AT&Ts of the world.
The new "Simple Choice" plans, which begin on October 31, involve the aforementioned unlimited data and texting as well as a "global flat rate" of 20 cents per minute for voice calls while roaming overseas. The new rates ($50 for one line, $80 for two, $100 for four) apply in 100 countries, from the U.K. to China.
Will it work? T-Mobile certainly has momentum in its corner. The carrier's bid to use its sizeable presence in the prepaid (a.k.a. no-contract) market to upgrade those customers to more conventional postpaid services—which are more lucrative—has resulted in growth numbers the company hasn't enjoyed for years.