Recent unlimited data moves from T-Mobile US and Sprint garnered headlines, but don’t expect them to impact churn
The wireless industry in the U.S. recently got all excited – again – about a new range of unlimited plans from T-Mobile US and Sprint. Just as one launches a new plan, the other rushes to one-up them. Analysts get excited. Financial folks look hard and do lots of analysis. But churn for the competitors seems to remain about the same. Why?
I think my family is pretty typical, at least from what I can tell from iGR’s consumer research; we have done a lot of work on why people churn, who churns and the impact of various factors on churn. Look at the postpaid churn rates for the last few quarters for all the major mobile operators and it is clear they are all falling or flat. Churn is not jumping significantly.
Which means millions and millions of people are not jumping over to new plans that scream “50% less” or “Unlimited!” And despite the attractiveness of these new plans, I do not think this will change significantly.
From a personal perspective, there are three main reasons why: “happy wife, happy life,” new devices and coordination. Let me explain each in turn.
Happy wife, happy life
Obviously a common phrase, but in my household it should probably be “happy college kids, easy life.” The reality is that we, as a family, have a share plan with 30 gigabytes of data per month plus rollover. One of our kids is in the U.K. for college most of the year (she is in the U.S. now) and so there are really 3.5 of us sharing the data. My son, who I have written about before (the 18-GB-in-two-weeks kid) and I use the bulk of the data. My wife spends most of her time on Wi-Fi.
We are all experienced mobile users; we know the network quirks and issues. I personally can see improvements, but there are still dead spots (like between Yellowstone and Grand Teton National Parks). I travel across the U.S. for business and need reliable service. I have it today. No need to change that. Or risk it.
My family rarely complains about the coverage or service we get today. Why change? Why risk that? Why move to another operator to save a few bucks but risk the experience?
Talking to friends and colleagues, they do have issues with some of the other mobile operators. Yes, I know they are getting better. But I also know coverage and network experience are market-specific (depends on spectrum used, etc.). For us, our mobile operator works well. No one is complaining about the network. Why change?
New devices
Next issue. Let’s say we want to switch. We would need new smartphones, four of them. We are an Apple family, which means four new iPhones. And hence, having to set up four new devices with apps, passwords, calendar, contacts, music, video, etc. Yes, I know it is way easier than it was a few years ago, but it still takes time.
When I get a new smartphone, I usually plan on two hours for the migration and validation. That includes Bluetooth (for the cars), Wi-Fi passwords, apps and security/privacy settings. Plus, iTunes music.
So if we got four new phones, I would be looking at about eight hours. I know, I know – the kids can convert their own. But the reality is that I will end up getting involved as the family’s de facto IT manager; they need passwords, settings, etc. It will take a day, trust me.
Now the selfish part – I am a busy guy, traveling on business and writing lots of market research for y’all. I like free time (hello mountain biking) and to lose a day for migrating to new smartphones does not sound fun. It had better be worth it.
Coordination
Aside from me being protective of my free time, coordinating the four smartphones is the biggest issue. My daughter is in college in the U.K., my son is in California. There were about four weeks this year where we were all in the same place.
The four smartphones are all on different installment/replacement plans. They are not all “free and clear” at the same time. And just as it seems a phone becomes eligible for upgrade, someone else drops their phone in a pool and we have to get a replacement. Which means another installment plan or payment. And the whole “out-of-sync” cycle starts again.
If we wanted to move four phones to a new carrier, I would literally have to start planning 12 months in advance.
”But you will save money!” I hear you scream
To be honest, when I saw the new plans this week, I expected I could save some significant dollars every month. After all, the new plans talk about “$40 per line,” etc. Remember, we have a decent plan right now with 30 GB-plus per month. And we manage to control the usage, even when my daughter is back in the country. If my wife used a huge amount of LTE data, maybe one of the new unlimited plans would make sense.
Right now, we pay $145 per month for the first line and $15 for each additional line, for a total of $190 (plus taxes, surcharges, fees to rebuild the local roads, donations to put a man on Mars and other assorted stuff even I do not understand).
From the pricing I found on Sprint’s website, two lines are $100 on the “Unlimited Freedom” plan. That means $200 for our family. I thought I could just move three phones over (for $160), but then I would need a new plan for the smartphone staying at the old carrier. Not worth it – we all move or not at all. So I would pay an additional $10 per month for Sprint to get unlimited.
One issue with Sprint: they limit mobile hot spot usage to 5 GB per month and this is a problem for my daughter and me. When traveling, I use LTE almost exclusively, and I like to stream Netflix to my tablet or laptop. I rarely use Wi-Fi in a hotel. A 5 GB limit for me is a non-starter.
Ok, so what about T-Mobile US? The new “One” plan is $40 per line, the website says. The first line is $70, then $50 for the second and $20 for the third and fourth. The usual “data prioritization at times of congestion” terms apply, but we would get a ton of data. The total is $160 per month (plus taxes, etc.). So we would save $30 per month.
Now I go back to my three issues and ask myself if it is worth $30 per month to risk the family’s experience and to coordinate all the phones, etc. The answer is no, especially when we are not incurring overage charges or having to significantly change our behavior to stay under our current limit.
And the reality is that if I wanted a better deal from our operator, it would take one phone call and a change of our TV provider. That would save us more than $30 per month.
I realize there are people that use more data than we do and obviously would want to save $30 per month. I am not questioning their decision, but for us it makes little sense. And once my daughter is off the college payroll (June 2017 – she will be teaching internationally for two years after graduation), the bill will fall and we will get more data to share among the three of us.
So, the answer to the question “why not switch operators to get unlimited” is – it is too much trouble for potential savings. And in that respect, I believe my family is the same as many in the U.S.
Iain Gillott, founder and president of iGR, is an acknowledged wireless and mobile industry authority and an accomplished presenter. Gillott has been involved in the wireless industry, as both a vendor and analyst, for more than 20 years. The company was founded in 2000 as iGillottResearch in order to provide in-depth market analysis and data focused exclusively on the wireless and mobile industry. Before founding iGR, Gillott was a group VP in IDC’s telecommunications practice, managing IDC’s worldwide research on wireless and mobile communications and Internet access, telecom brands, residential and small business telecommunications and telecom billing services. Prior to joining IDC, Gillott was in various technical roles and a proposal manager at EDS (now Hewlett-Packard), responsible for preparing new business proposals to wireless and mobile operators.
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