Editor’s note: T-Mobile is positioning itself to take its Un-carrier movement to the IoT realm, says analyst Steve Vachon of Technology Business Research.

HAMPTON, N.H. – T-Mobile experienced its highest rate of year-to-year revenue growth (17.8%) since 4Q14, driven by the launch of the iPhone 7 in September. The annual launch of the latest iPhone is a choice time to target new customers, as many consumers are waiting for the new device to release before switching carriers. T-Mobile capitalized on this opportunity through the launch of its T-Mobile One unlimited data program in August, ahead of the iPhone 7 launch in September.

The subscriber and equipment revenue growth spawned by T-Mobile’s new offerings outweighed negative factors impacting the operator’s revenue in 3Q16, namely, the sale of the company’s Wal-Mart Family Mobile MVNO business to Tracfone as well as the recall of the Samsung Galaxy Note 7.

TBR believes the launch of T-Mobile One was a natural course for the operator as it has already been providing unlimited access to bandwidth-intensive video and music streaming services through its previous Binge On and Music Freedom offerings. The higher price point of T-Mobile One contributed to the company increasing postpaid phone ARPU year-to-year in 3Q16 (0.3%), an anomaly within the current U.S. wireless market.

T-Mobile One will boost postpaid phone ARPU in the short term as more customers transition to the program, though the offering will limit the potential for long-term ARPU growth as customers lack a more expensive data tier they can migrate to in the future. Though the operator may alienate some cost-conscious customers by eliminating its tiered data programs to offer T-Mobile One exclusively, the company can target these customers through the more aggressive pricing promotions offered by MetroPCS.

TBR believes the launch of T-Mobile One will be the capstone of its Un-carrier incentives directed at phone customers as the company has a limited number of other incentives it can offer subscribers within the segment. T-Mobile has been preparing to attract the next generation of mobile customers through its ventures in IoT and 5G.

  • T-Mobile prepares for short-term and long-term growth in IoT

Though T-Mobile is in the early stages of testing 5G, the operator is taking a different approach than Verizon and AT&T, which are determined to launch a prestandards form of the technology as part of fixed wireless platforms both carriers plan to start piloting in 2017. T-Mobile is taking a more up-front approach to 5G, informing customers the technology will not reach industry-standards and its full potential until the 2020 timeframe.

T-Mobile has begun marketing the practical use cases its future 5G IoT solutions will provide consumers in areas such as virtual reality, 3D printing, mobile health and personal security. TBR believes T-Mobile’s long-term 5G IoT strategy will share the same core principles behind its current Un-carrier phone strategies, which is a focus on alleviating consumer pain points and providing customers added value and convenience.

TBR believes T-Mobile’s successful marketing style will build anticipation among consumers for the company’s 5G IoT solutions as they start to become available over the next five years.

In the short term, T-Mobile’s is focused on building its IoT base by capitalizing on the upcoming shutdown of AT&T’s 2G network in January 2017. T-Mobile plans to continue operating its 2G network through 2020 and is offering AT&T’s 2G M2M customers incentives, including free SIM cards and 50MB of free data.

T-Mobile can target the remaining 2.8 million 2G connected device customers and 673,000 2G reseller subscribers remaining on AT&T’s network as of October.

(C) TBR