Double trouble as disruptors T-Mobile, Netflix combine forces

Straight to Netflix is the latest initiative from T-Mobile US on its path of disruption, offering subscribers to its T-Mobile One family plan free with unlimited data for the streaming service – but one that will come at a quite a cost to the uncarrier.

Disruptive and pro-consumer, definitely; desperate to revitalize growth after been handed its least number of phone additions in three years in the last quarter, perhaps.

Taking nothing away from yet another cleverly sculpted marketing strategy, T-Mobile has once again broken the mold, as not many operators in the US have been pushing Netflix with the same enthusiasm as those in Europe – but offering it completely free came as an unexpected move, even from a CEO like John Legere who has a spontaneous reputation.

No financial terms have been disclosed, but we suggest that T-Mobile  could be paying as much as 50% of a full subscription price to Netflix. The wireless provider has a total of 69.5 million subscribers, but has not broken out how many are on the One family plan – although this is not likely to be substantial as the plan is just one year old.

New or existing subscribers with two or more T-Mobile One lines can qualify for free, all you can eat Netflix – costing $40 a line for a family of four.

Legere famously doesn’t shy away from calling out competitors for being stuck in the mud, and T-Mobile’s press release resorted to that tactic again this week. It attempted to shame US operators for what it calls the carrier bundle, citing the way AT&T and Verizon push “bigger, fatter, pricier packages” as being a major pain point for consumers today and simply a way for operators to drive up ARPU.

T-Mobile says that network speeds for AT&T and Verizon have plunged since they rolled out unlimited offerings earlier this year, and it specifically slammed Verizon for capping all video speeds as its network struggles to cope with usage. “I mean, you can’t make sh*t up like Go90,” said Legere, in a video announcing the Netflix partnership this week.

Backing up its own corner, T-Mobile claims its network has actually increased in speed, as shown by the graph below. A report from wireless mapping firm OpenSignal ranked T-Mobile as number one in all three categories – speed, latency and LTE availability. Hats off to T-Mobile for being the first wireless provider to achieve this feat.

To the dismay of AT&T and Verizon, T-Mobile’s 600 MHz LTE network was switched on last month and is expected to roll out country-wide by the end of this year, opening up even more capacity using the large haul super-premium low band spectrum it won in the government broadband incentive auction earlier this year.

In the second quarter of this year, T-Mobile claimed it was up 2 million customers, but from the previous quarter it had actually dropped 3 million subs, with 4 million being lost to wholesale.

Some have suggested that the arrival of T-Mobile One marked the death of Binge On, its uncapped plan encapsulating multiple OTT video services, but Binge On actually triggers any WiFi service which the user has credentials for, in preference to cellular – cutting down the video burden on its network. Perhaps this Netflix deal will do the same.

T-Mobile claims the US experienced a tipping point this year, as more than 50% of consumers spent more time on smartphones and digital devices over traditional TV – forecasting that this will more than double by 2020.

“The future of mobile entertainment is not about bolting a satellite dish to the side of your house or resuscitating faded 90s dotcoms. The future is mobile, over-the-top and unlimited,” said Legere. “While the carriers spend billions on their franken-strategies to cobble together carrier–cable–content mashups, the Un-carrier just leapfrogged them all by partnering with the best and giving it to customers at no extra charge. Because that’s what we always do. Give more to you without asking more from you.”

Netflix CEO Reed Hastings said, “This is the right move at the right time – for all the right reasons. More and more fans are bingeing on mobile, so we’re bringing together Netflix’s award-winning TV shows and movies with T-Mobile’s award-winning, unlimited network.”