2014 Telecom Expense Management Trend #3: The Mobile Carrier Wars: What does it mean?

[As a followup to our TEM in 2014: History and Trends webinar (available as a stream or a white paper), we’re offering a series of posts covering telecom expense management – where it came from, where it’s going, and trends for the future.]

Unless you’ve been living under a rock, you’re aware that the mobile carriers have been taking major pot shots at each other lately.  ATT&T and T-Mobile especially, and between the nutty CEO antics and “mano a mano” marketing strategies, the tactics and analyst speculations fill industry news.

What is driving this increasingly interesting behavior?  Basically, most people already have a mobile device, and once they hook in with one vendor, it is very hard to get them to move.  Carriers in the past made money by growing – either through adding new subscribers, or upgrading those with a “dumb phone” to a smartphone.  But that strategy is declining as we reach the saturation point, which translates to shrinking margins.  So vendors, both to gain market share and to differentiate themselves in a rapidly commoditizing area, have resorted to stealing clients from each other.

Whether it is eliminating long hated items like roaming charges, or offering to pay early termination fees, they are getting more and more aggressive.  They are also testing the waters on doing away with the “new every two” idea where customers are locked in for two years, but they get the phone for free.  Some carriers are changing it up so the customer pays full price for the phone, but in small increments over time, not up front.  Then, once the phone is paid off, the bill drops to just the service charge – which is an attractive change from the current standard, where the monthly fees are set and even after the device is long paid off, they never go down.  The customer can also leave at any time, providing they cover the cost of the phone before doing so, and can upgrade whenever they want.

Time will tell how these tactics impact business telecom, but we are sure that they will. IT and telecom managers need to stay sharp, and watch how these changes can be leveraged to cut costs and provide flexibility.  Just as unlimited data plans gave way to “pooled” plans, the market will continue to shift and evolve, hopefully for the better.

Next Trend #4: The Wave of Wearables