T-Mobile is hitting some new notes in its drive to lure customers from the competition: free phone trials and free music streaming.
Want to test an iPhone 5s? Starting Monday, you can sign up for a free seven-day trial on T-Mobile's website and the service provider will send you one for no money down. If you decide to return it to a T-Mobile store, you won't be charged.
Other carriers "ask you to buy blind," said T-Mobile CEO John Legere in a statement. "The way this industry forces Americans to buy wireless is completely, utterly broken. I'm here to tell you there's a better way."
The free trial is just the latest in the No. 4 carrier's moves to gain market share. T-Mobile has agreed to pay early-termination fees for customers who switch from other carriers and has eliminated wireless contracts and gotten rid of overage fees. As a result, T-Mobile says it added 2.4 million customers in the first quarter, up from 579,000 a year earlier.
The free trial "makes great sense when paired with their offer to pay off a customer's ETF (early termination fee) if they change operators," said Rich Karpinski, senior analyst with the Yankee Group. "The test drive is the offer, and paying off the (fee) is the conversion action. ... That's potentially powerful."
In other announcements at a Seattle press event Wednesday night, T-Mobile said that current and future customers can now stream music for free from Pandora, Rhapsody, Spotify, iHeartRadio, iTunes Radio and Slacker Radio. Customers may still pay those services for enhanced programming -- for $4.99 monthly, Pandora subscribers get no ads and improved audio quality -- but T-Mobile won't count streamed music toward their data plans.
Even if T-Mobile customers use up all their high-speed data -- and other services transition to lower-speed data -- their music stream will remain at high speed. "We are actually making it free to stream all the music you want on your smartphone from all your favorite streaming services," says T-Mobile Senior VP Andrew Sherrard.
Half of smartphone owners listen to music on their devices, according to eMarketer. T-Mobile's network has seen a six-fold increase in streamed music on its network over the past three years, Sherrard says.
"Music is such a critical part of everybody's lives, and we don't think the traditional carriers have made it easy or really friendly in how they've set up their music services," he says.
T-Mobile's music strategy could drive other providers to set aside other popular apps from data caps, says Carrie MacGillivray, vice president for mobile services for IDC. "They continue to disrupt the mobile services landscape with out-of-the-box thinking," she says.
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