Vegas Baby! T-Mobile Easy to Switch Un-carrier Event

Full Transcript

Don Kellogg 0m10s

Hello, welcome to the two hundred and seventy first episode of the week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me coming from Vegas is Roger Itner. How are doing, Roger?

Roger Entner 0m24s

I'm great. How are you?

Don Kellogg 0m26s

Pretty good.

Roger Entner 0m27s

You know? For once, what happens in Vegas does not stay in Vegas. We're gonna talk about the of the Right?

Don Kellogg 0m35s

Yep. So you're there for the Grand Prix. Right?

Roger Entner 0m38s

Well, T Mobile very generously, invited me to be here for the launch of their Un carrier event around making switching easy. And also to extend this with attending the Grand Prix. This is a kick out of the ballpark event. The T Mobile people are really doing a fantastic job providing us analysts terrific access. Like yesterday, we had a conversation with Srini Gopala and Mike Cutts and John Fryer.

Roger Entner 1m16s

That level of access is, for most analysts, extremely rare. We're in the fortunate position we get this more often. Really cool event, but let's talk about the making switching easy Un carrier event. You know, I'm so pleased that T Mobile is now I think this is the first of many Un carrier events that they're picking up the pace, right? T Mobile is not talking about it, but T Mobile is today already the largest consumer carrier in the country.

Roger Entner 1m49s

More consumers are with T Mobile than with anybody else. Part of it is that they're doing a lot of things right. On the other hand, the other guys could have done a better job, especially the folks in red. And I think Dan Schulman is trying to fix this as hard as he can. Because I don't think it would be like this today without the policies of Hans Vesperg.

Roger Entner 2m16s

And I think Dan is here to really fix it. And at the same time, it's really interesting and for me very gratifying to see here in T Mobile a company that's in consumer number one, and in all likelihood, unless Dan Schulman does like a really dramatic turnaround, is probably the number one in total customers by the 2026.

Don Kellogg 2m44s

Well, at the current pace, right? We talked about that.

Roger Entner 2m46s

At the current pace, right? And I'm sure AT&T is trying everything they can to allow that to happen. Verizon even harder. The cable guys are working hard. You know, you have a massive transformation at Comcast underway.

Roger Entner 3m1s

By the way, I want to point to our Christmas twenty twenty three episode where Denny Streigle talked about how it is to be a disruptor as the market leader, which is really hard because everybody tells you not to do it. But with this, let's talk about making switching easy where they have identified an issue that they're going to fix, like starting early December, I think. It's already in beta. So what T Mobile is going to do is it's going to take a lot of friction or most of the friction out of switching process. And so already today, their app is the most powerful app that lets you do the most things and they have a lot of high engagement.

Roger Entner 3m51s

On public record, Verizon said that more of their customers have their app. T Mobile, it's not far apart, but T Mobile lets you do and has higher engagement.

Don Kellogg 4m1s

Well, I I would say as a T Mobile customer myself, right, that T Mobile has very, very aggressively pushed people towards the app. For example, if you call care, you have to verify your identity through the app. If you go into a store, they'll do the same thing where they push you to the app to do the verification. So they're basically kind of gating service service help behind the app. I don't I don't know if that's a good thing or a bad thing depending on how fluent you are with technology.

Don Kellogg 4m25s

You know, it's totally fine for me. If I ask my parents to do it, they might have some trouble with it.

Roger Entner 4m30s

And that's one of the dangers. Right? But I think what they can do now that they can do switching through the app, they can make switching an impulse buying decision where you're sitting on your couch or you're at a concert or wherever, and your current provider is pissing you off. You can download the app and in fifteen minutes you're gone. And apparently it works also with family plan and everything.

Roger Entner 4m58s

Now if you do impulse switching, when you come home, you might come home to an unhappy spouse or child when you switch that that wireless carrier too. Right? Right. Right. I'm like, honey, guess what I did today?

Roger Entner 5m12s

You switched our carrier. You know? We need to talk.

Don Kellogg 5m16s

Right. They brought up some really good points on the on the presentation. Right? Like, there's a huge, huge proportion of people that have always been on the same carrier since the beginning of time. And I think some of it is switching inertia because switching is a historically has been a pain.

Don Kellogg 5m30s

You know, I I've switched probably seven or eight times. I I know I'm an anomaly in that respect, but it it generally takes a couple hours to do it. They're not lying about that. You know, the more lines you have, the more of a pain it is. Then beyond a certain point, you know, if you've got, like, your mother-in-law and your kids and who knows else on your plan, it becomes prohibitively difficult.

Don Kellogg 5m48s

So I think there are lot of people that are stuck.

Roger Entner 5m51s

And funny enough, we had already done research on all of this, right? And so we walked in prepared, right? And so for example, of the people who are planning to switch, one of the things we're asking people is like, if you're so unhappy, right? We ask people how happy or unhappy they are. We do Net Promoter Score numbers.

Roger Entner 6m13s

And so to some of the people we ask them, hey, if you're so unhappy, why are you not leaving? And number one reason is like taking time to sign up with a new provider. Number two reason is like taking time to cancel with current provider. Those are like the two major pain points that hold back with postpaid about 35% each. And they're rolling it out right now on postpaid.

Roger Entner 6m38s

This is equally, if not more so dangerous for the other guys on prepaid where the switching is even higher. Right? And the people are less tied.

Don Kellogg 6m48s

I think this is a great idea. But one thing I would say is that when you're switching, it's usually not the carrier switching to that's the problem. It's the one you're switching away from.

Roger Entner 6m56s

Yeah. So it would be interesting. Right?

Don Kellogg 6m58s

Right. What stops, you know, everybody else from kind of putting the brakes on and saying, I'm gonna make this last as long as it possibly can?

Roger Entner 7m5s

Well, and like, you know, in the conversation with my cuts, he's like, well, let them, right? If they want to be customer unfriendly, we will identify that and point it out to the client. If they want to out themselves as jerks, then be my guest. The other thing that I thought was really, really important what they did is they looked at switching as an entire process of not only like moving from one carrier to the other, but then also, oh, you want to have a new device? Or hey, with part of switching, we give you a new device.

Roger Entner 7m42s

But what if you right now don't want to have a new device, but right now it's March and you want to have a new iPhone and you are okay with the current one, our offer stands until the new iPhone comes out and then you can cash it in. That is really smart because it levels out the switching and it decouples it from device releases and evens this out, and it becomes like an an every year weapon. So that's really, really smart. But, I

Don Kellogg 8m11s

mean, I I would I would say it's not like keeping your device or getting your new device that is the bump in the road. It's the 400 or $800 charge you get when you cancel service and you no longer get your device plan being paid Oh. Right, by the carrier. Right? And, like, they conspicuously did not mention that.

Don Kellogg 8m27s

Right? So it's not that I'm just waiting to get a device and I want the new one sometimes. Sometimes it's like I've got a year left to pay off my device.

Roger Entner 8m35s

But they're pulsing in and out. We pay off your your balance. It gives them more freedom.

Don Kellogg 8m41s

Right. But they didn't say that they're gonna pulse on and off their bounties. Right?

Roger Entner 8m44s

Yeah. No. But it it was not a promotional event. The other thing is that it strengthens their partnership with DoorDash. Because DoorDash not only gets you your groceries, but also brings you your phone or you pick it up.

Roger Entner 9m0s

In the end, it will be roughly like 80% of customers where this works because DoorDash doesn't dash to your door when you live in the middle of rural whatever. Right? You know, there you you have a door slow walk.

Don Kellogg 9m14s

It's It's a really interesting compelling thing too. Right? Because I mean, of the things they talked about was if you're gonna switch, if you've a multiline account, you've gotta bring everybody into the store and take a couple hours and everybody, you know, because everybody's gotta walk out with a device that you swapped out. Right? And this allows you to kind of switch and you can have your kid at college, you can have your wife at at work, your mother-in-law, whoever.

Don Kellogg 9m35s

Right? Then they get their devices. And I think it really does remove a lot of the friction. Nobody wants to go to a carrier store on a Sunday afternoon.

Roger Entner 9m43s

Yeah. Especially with the family. Right. The other thing that I think is really important, which Srini pointed out several times, is they don't view digital as a channel, but as an enabler, as a process. And that's the right way to think of this.

Roger Entner 10m0s

Right now we're thinking digital as a channel. You know, it took a pandemic and millions of people to die to go from less than ten percent to less than twenty percent of people who are switching through digital channels. And Mike Katz in the presentation also rightfully pointed out, it's like mobile is the only product that you couldn't buy on a mobile device. The irony is real. And so we're like in the high teens with digital and that's online and the mobile device.

Roger Entner 10m30s

Forty three percent are buying their mattress online. You know, I think you have a much more intimate relationship with your mattress than with your phone and you're willing to buy this thing online. And so I think this will help them. The two dangers that I see is upsell. You know, a lot of people are walking in the door with the intent of the advertising for the lowball offer and walk out with a premium offer.

Don Kellogg 11m0s

Don't forget the screen protector that's 100% markup, right?

Roger Entner 11m3s

It's not 100% markup, it's a lot more, right? When you look at it, those cases that you pay 20 to $60.80 dollars to make them there's like between 1 and $4. Half of this thing is margin. The same way, like how do you get people to get device insurance? Device insurance for I think everybody but Charter is like they go fiftyfifty on this.

Roger Entner 11m32s

And it's extremely profitable for a carrier to do that. By the way, we've done a lot of research on that. We're launching a report store on our website. And so I think XJ is putting I know he's working on it because I read it on device insurance. And there's so little research out for that.

Roger Entner 11m51s

And it's such a profitable thing. Now, to great credit, Charter, call out to our friends there, they have a really low cost one that is quite fantastic. Well, fact that

Don Kellogg 12m2s

they can make a low cost insurance program work is indicative of how high the margins really are, right?

Roger Entner 12m8s

But the thing is, how do you properly upsell in a digital channel? The more information is available to the customer, the less they go for things like that. Some of it rightfully, other times not. There are a lot of reasons why you want to have device insurance, because some people are clumsy and they drop this thing more often than not. Other people might be overkill, right?

Roger Entner 12m34s

You can't sell with FUD anymore fear, uncertainty, doubt. And so it will require a new skill set on how to upsell customer at the point of sale. And so that will be very, very interesting on how T Mobile will solve that. Because otherwise, yes, it will be much easier to have more people come in, but they will come in at a lower price point. And so one of the things I will be looking at is to see how did the take mix change between the entry level and the premium price plans.

Roger Entner 13m11s

And historically T Mobile said like 60% are taking their premium price plans. And so it will be very interesting of how this will be after switching Made Easy of how this changes. And if they are saying and giving more data on that in future earnings or investor calls, it will answer our question either way. If they tell us, oh, it's now 65%, we know that they solved the problem. If they shall forever remain silent, we know it might be not that case.

Don Kellogg 13m45s

Well, I mean, you're if you're pushing up your gross ads by that much, right, like, it's really additive to the switcher pool Yeah. Then you may we may care a little bit less. The other thing I think that will be interesting here is that the folks in Basking Ridge and in Dallas are not gonna sit back and let this happen and not try to do their own version of this. Right? And so I guarantee you there are people at both those places today, morning, thinking through how they can make switching to them easier.

Roger Entner 14m10s

Oh, yeah. Absolutely.

Don Kellogg 14m11s

Similar to, like, almost all the uncarrier the true uncarrier moves, and I would classify this as a true uncarrier move, it's gonna be a change across the industry. Right?

Roger Entner 14m20s

Yeah. No. No. No. And The

Don Kellogg 14m21s

response will be as much as much of a of a deal as the initial move.

Roger Entner 14m26s

Yeah. And it's one of the examples where T Mobile, even under ledger said like, we're gonna change this industry for the better. And for everybody, even for people who are not T Mobile customers. That's an example. Also, all the other carriers need to follow through with this so that this app and functionality is not only an outflow, but also an inflow.

Roger Entner 14m50s

Right. And by the way, almost everybody has already an app that lets you test drive the network for a day, a week, a month, you know, depending on what happens.

Don Kellogg 15m1s

Right. But I mean, it's different to give somebody a temporary IMEI than it is to do the full port. But yes, absolutely. Everybody

Roger Entner 15m8s

Yeah. It's more involved.

Don Kellogg 15m9s

Almost everybody on prepaid and postpaid now has the ability to do test drive.

Roger Entner 15m13s

Yeah, exactly. But that's the beachhead, right? That's the beachhead. And now they need to execute and expand. I'm sure some people will have a not so happy Thanksgiving based on this, where they're like, hey guys, we need this and get moving.

Roger Entner 15m28s

So great event, happy they're doing things. One of the research things that we're doing is to see how much does this expand the switcher pool, right? Right now, we ask every week, we ask everybody who takes our surveys and like in telecom it's now 15,000 people a week. It's a huge number. So we ask them, who's your current provider?

Roger Entner 15m52s

How long have you been with your current provider? Who's your previous provider? If you have to choose a new provider, who would it be if your current provider is not available? And when are you planning to leave? And so we are able to determine the people who said, we know that, I'm not planning to leave.

Roger Entner 16m12s

And now we're looking, and this weekend we're going to run questions on does this inert pool who says, I'm not planning to leave, how does this change with this offer?

Don Kellogg 16m24s

Well, there's two pieces here though. Right? There's the inert pool, but there's also switch intention has always been higher than actual switching. Right? The question has always been, you know, why is that?

Don Kellogg 16m36s

Right? And so for example, you know, a prior Un carrier event that T Mobile had done was the whole locked phones event where they were primarily targeting AT&T, but Verizon was also a target to some extent. And what's interesting is we didn't see that move the needle as much as as I think some folks would have initially thought that it would. And I think the hypothesis there was like, well, switching is a huge pain in the ass. If you've got five lines or like a lot of these folks on Verizon, AT&T have many, many lines, it's very difficult to do this.

Don Kellogg 17m4s

It'll be really interesting to see if this can kinda move the needle in that respect. And if it does, it'll it'll drive huge amounts of nets. Right?

Roger Entner 17m10s

Well, we'll see. We'll see on how that switching intent and how the base that didn't intend on switching because they thought it was such a difficult thing if they can activate that switcher pool and churn to go up in a measurable way. I'm excited for Monday, Tuesday, when we analyze the data and make it available for our clients. As I said, what's happening in 2025 is really exciting. 2026 will be such an epic year, and consumers will be the beneficiary.

Roger Entner 17m45s

Because almost every carrier has really ambitious goals, and not everybody can be happy and will make it. The days of where everybody could be a winner are gone. Next year, there will be much more stark winners and losers and consequences.

Don Kellogg 18m1s

Alright, Roger.

Roger Entner 18m2s

Well, with that, happy Thanksgiving, right?

Don Kellogg 18m4s

Happy Thanksgiving. Alright. I don't We'll we'll see what we read for Thanksgiving. Okay. But wishing everybody a happy holiday.

Roger Entner 18m12s

Yep. Talk to you

Don Kellogg 18m13s

next week.

Roger Entner 18m13s

Alright. Bye bye.