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When T-Mobile execs sat around table to develop their "Un-carrier" strategy, they ran through a list of pain points for wireless users. Exorbitant international roaming rates were undoubtedly near the top of the list. With its announcement today of Unlimited Data and Text in 100 countries worldwide for Simple Choice customers, T-Mobile should be applauded for taking on what I call the last bastion of 1970s era telecom: international wireless roaming. Voice and data roaming costs have been a huge pain point for international travelers. International roaming rates often exceed a 10x premium for voice, data, or text compared to comparable plans in the U.S. or in users' home countries. With its announcement today, T-Mobile has launched a "digital one rate" for travelers, which wireless historians among us will remember that AT&T revolutionized wireless pricing when it introduced DOR 15 years ago. The new T-Mobile rates are simple, predictable, and transparent. No longer will travelers have to look at "rate tables" before embarking on a trip, or have to navigate the maze of "local SIM" and other options they have taken to protect themselves.
This will be an important differentiator for T-Mobile, especially for postpaid users and those in the business market where the company is anxious to gain share. T-Mobile appears to be especially going after AT&T, which has been the most aggressive of the U.S. operators in offering international "packages" of various sorts to subscribers.
The one downside of this plan -- and which T-Mobile does not reference in the announcement and release materials -- is that the data rate for unlimited data defaults to EDGE-type speeds, which T-Mobile execs described as "around" 128 Kbps. This might be adequate for e-mail and light Web browsing, but I believe the user experience at EDGE speeds, for wireless users who are becoming increasingly accustomed to 3G+ and 4G speeds, will seem pokey. For example, navigation applications such as Google Maps, which are popular among international travelers, do not provide a particularly good experience at EDGE speeds.
T-Mobile's solution for this is a creative approach called "Speed Boost", which is available in $15/100 MB, $25/200 MB, and $50/500 MB packages (and slightly different packages for enterprise plans). Now, $25 for a week-long 3G or 4G "boost" that provides up to 200 MB of usage is cheaper than a day of WiFi in most European and Asian hotels, and is likelier to get by the expense report guy than today's typical roaming bill. When you do the math on Speed Boost, the average is 10 to 15 cents per MB, or about $100-150 per GB, it is less expensive than the competition, but still fairly expensive for anyone who really wants 3G or better speeds. Although the new pricing structure for Simple Choice might stop travelers from turning data roaming "off" the minute they embark beyond the U.S. border, they'll still find themselves hunting around for WiFi if they have really intensive data needs.
The voice part of the offering, at $0.20 per minute, is positive for its predictability, and in the aggregate, is cheaper than the competition. But $0.20 per minute still adds up for those who really use it. Frankly, paying more than a dime a minute doesn't sit right in a world where voice has, in many countries, become essentially "free".
What T-Mobile is really doing here is opening a new frontier in competition, and a way to increase its share in the business market. The negotiated rates with international carriers are reasonable enough at EDGE speeds for T-Mobile to "eat" some cost, and then provides a nice upsell opportunity (and protection for T-Mobile's bottom line) with Speed Boost.
Another, perhaps under-recognized, aspect of this plan is that the best deal for travelers in recent years has been Blackberry's international plans, which have provided access to e-mail, BBM, and basic Web browsing for a modest cost. With so many business travelers migrating from Blackberry to iOS and Android devices, this provides a good option for users.
I expect T-Mobile's competitors, especially AT&T, to respond aggressively. I also expect that T-Mobile will eventually improve the "standard" speed offering that's part of Simple Choice for travelers to include a more generous 3G option, especially as it re-negotiates roaming rates with international operators.
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