The Uncarrier Comes to Enterprise

New T-Mobile Plan Aims to Steal Small Business Clients from Verizon, AT&T

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T-Mobile has upended the consumer telecom market. Can it do the same for enterprise?

That's the plan.

Last week, the fourth-largest national operator (or third, if you ask its CEO) announced the ninth iteration of its splashy "Uncarrier" initiatives. This one focused on business. The carrier introduced a phone rate plan for corporate clients priced to undercut Verizon and AT&T. According to T-Mobile, their two rivals command nearly 90% of the $80 billion plus wireless enterprise market.

For its first big step into the space, T-Mobile is focusing on small businesses, tacking on free domain services, courtesy of GoDaddy, and office software, courtesy of Microsoft, to the rate plans. And it's bringing its combative style, casting the incumbents as cumbersome and exploitative.

"There really is this cat-and-mouse game that carriers force people through," said Mike Katz, VP-brand, acquisition and channel marketing for T-Mobile. "It's felt super corporate because the companies that run it have set it up that way. We think it's wrong, and we don't want to do business that way."

To market its offering, the carrier will lean on direct-response channels on digital platforms, email, traditional mail and radio, Mr. Katz said. A promotional video, starring comedian Rob Corddry, will air online. The carrier will also push the promotion in its retail stores. Mr. Katz claimed the company has shifted employees experienced with enterprise into retail and hired others from outside.

Analysts were skeptical of T-Mobile's ability to carve business from the larger carriers, who often bundle wireless services for companies with their still-sizable wireline offerings. It may pose a threat to Sprint, which has a small chunk of the market. But T-Mobile lacks the billing, software and personnel infrastructure of the big two operators. In March, AT&T launched a new enterprise offering, along with Microsoft, which the carrier claimed is tailored to small businesses. AT&T has over 2,400 small business account managers, according to a company spokesman.

Mr. Katz said T-Mobile's business sales force is "in the many hundreds," but would not specify its exact size. The carrier spent around $192,000 in measured media for its current business offering in 2014, according to Kantar Media. AT&T spent $92.5 million for its business services arm.

T-Mobile misstepped in enterprise before. A year ago, it removed a corporate discount offering in an effort to simplify rate plans, only to reverse course a week later after customer outcry.

Still, analysts aren't writing T-Mobile off. The carrier continues to topple predictions on subscriber growth, thanks to its aggressive deals. Similarly, its business plan could peel away corporate customers -- the offering allows employees to count a company-paid line on a family plan, netting a discount. "At this point we will take a wait-and-see approach," Walt Piecyk, an analyst with BTIG, wrote in a research note, "but to T-Mobile's credit, it has typically exceeded expectations in these types of situations over the past two years since [CEO John] Legere has taken over."

Much of T-Mobile's consumer marketing success has been tied to Mr. Legere's outsized personality. That charisma may be difficult to translate to the more buttoned-up business world. But the company isn't altering the brand and its schtick. Mr. Katz said the strategy -- and marketing budget -- for its enterprise push will fall under the company's consistent approach to consumers. "I don't see us changing there because I don't think the customer wants us to change," he said.

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CORRECTION: An earlier version of this story said AT&T launched its new enterprise partnership with Microsoft in January. The companies did so in early March. We regret the error.

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