T-Mobile has a secret sauce for selling T-Mobile Home fixed wireless service in rural areas that involves a granular competitive analysis of 775 sub-markets, said CEO Mike Sievert on the company’s first quarter earnings call yesterday.
The company is seeing strong growth for the fixed wireless offering, having reached 1 million subscribers in less than a year. And the product is particularly strong in what the company calls “rural and small” markets that T-Mobile identifies as 40% of the U.S. population.
The rural and small market segment, in turn, is comprised of the 775 sub-markets and for each sub-market, “we study our relative competition,” said Sievert. “Where is our network? Is it everywhere we need?” This analysis informs the playbook on how to grow penetration in these markets.
Based on this analysis, he said, “we believe we’re competitive across about 30% of POPs represented by [these rural and small markets].” (“POPs” is a wireless industry term meaning essentially wireless covered population).
Each sub-segment is assigned to a different level of competitiveness – and Sievert referred to the markets where they are competitive (currently the 30% benchmark) as “right to win” markets.
“In those 30% of POPs where we already have a right to win, we’re winning,” he said. Sievert predicts T-Mobile will grow that 30% benchmark to 50% of these identified rural and small markets by the end of 2022.
Sievert also noted that with T-Mobile Home, “we go to market” in areas where the company has “pockets of excess capacity” on its mobile network.
“It’s the nature of a mobile network that you have to be everywhere to be competitive,” he noted.
But some areas have relatively little mobile traffic – and those areas often make great targets for fixed wireless, he said.
His comments reveal a glass-half-full attitude toward a phenomenon that financial analysts at MoffettNathanson viewed as a glass half empty in a recent research note. The analysts questioned whether T-Mobile will be able to meet its goal of 7 to 8 million T-Mobile Home Internet customers by 2025, considering that the company is not making the service available or is limiting sales in areas where mobile usage is the heaviest.
It’s important to note, though, that T-Mobile is still rolling out service to small and rural markets and had only reached 30% of those markets as of the end of 2021. And considering the success that the company has had in those markets, it would appear poised to see continued strong growth – at least for the near future. As noted, the company expects to be competitive in 50% of its identified small and rural markets by the end of this year.
A replay of the T-Mobile earnings call with Sievert’s remarks about T-Mobile rural fixed wireless strategy is available at this link.
