T-Mobile US, Inc. and Uncarrier 7.0: Are AT&T and Verizon Running Scared?

Source: T-Mobile US.

When scrappy wireless underdog T-Mobile US presents another one of its "Uncarrier" strategies, cages rattle all around America's wireless communications market. That happened again last week, as T-Mobile introduced its seventh Uncarrier policy. Over the next two days following, T-Mobile shares rose 1,1% while AT&T and Verizon Communications fell by about 0.6% each.

T-Mobile CEO John Legere took the stage at an unveiling event in San Francisco, tied to a live audio webcast. "This time it's personal," roared the tag line for Legere's presentation.

The first 6 Uncarrier announcements mostly focused on lowering subscriber bills. Starting off by eliminating two-year contracts, T-Mobile introduced the first early upgrade in the industry (which now is a standard practice), removed roaming fees, and offered to pay off early termination fees when a new customer left another carrier a bit early. The latest installment separated popular music streaming services from T-Mobile's bandwidth caps, and gave customers a chance to "test drive" Apple 's iPhone 5S in a free seven-day trial.

Uncarrier 7 is a bit different. Rather than reducing costs, this one's all about improving coverage. To do so, T-Mobile is leaning heavily on enhanced Wi-Fi calling features.

Wi-Fi Un-leashed

First and foremost, T-Mobile is rolling out Wi-Fi calling to every user under the popular Simple Choice calling plan. The company has actually offered free Wi-Fi calling features since 2011. But Wi-Fi calling only worked on a select handful of Android phones; Apple added support for this technology in testing versions of iOS 8, which will roll out to many modern iPhone models alongside the release of iPhone 6 this week.

The new version, dubbed Wi-Fi Un-leashed, will apply to the all of T-Mobile's new smartphone models and many existing ones, including updated or just-released iPhones. Moreover, the phone will be able to hand over connections between Wi-Fi and 4G LTE connections without dropping the call.

And, this version will offer HD Voice audio quality over both LTE and Wi-Fi links. That's another quality-boosting feature that T-Mobile presented early, and that Verizon only started offering last month .

"Wi-Fi Un-leashed is a game changer," Legere said in a prepared statement. "This is like adding millions of towers to our network in a single day."

How unique is this Wi-Fi calling feature?

Verizon doesn't offer Wi-Fi calling yet and AT&T won't offer this feature until 2015. So T-Mobile is smart to make a big promotional push behind Wi-Fi calling while the big boys are sitting on their hands.

Included in this Uncarrier launch, T-Mobile will open a sign-up window for its JUMP! upgrade program, for existing customers who don't have a Wi-Fi calling compatible phone yet.

Furthermore, T-Mobile will send out a Wi-Fi router to interested customers, free except for a refundable $25 deposit.

This device connects to your existing broadband service, then provides a Wi-Fi signal tuned for optimal voice-over-WiFi performance.

"It's like a T-Mobile tower in your home," explained T-Mobile spokeswoman Lindsay Morio in an email exchange. "At home, the Personal CellSpot prioritizes T-Mobile voice traffic over other types of Wi-Fi traffic (such as your kids are streaming a movie or our co-worker is watching YouTube videos) for crystal-clear HD Voice calls."

Pulling out all the stops. Source: Wikimedia Commons .

Will unlimited Wi-Fi calling help T-Mobile steal subscribers from the other major networks? Only time will tell, but as a Magenta subscriber myself, I'm happy to see a reduced load on its often overburdened network.

What can T-Mobile's new ideas do for investors?

What T-Mobile is doing here is actually quite simple. The underdog is putting pressure on the big boys -- AT&T and Verizon -- to either innovate or lose customers.

In this case, the Uncarrier announcement also aims to take some load off of T-Mobile's wireless networks by handing many calls over to hardwired broadband connections. So it's a two-pronged attack, improving the customer experience while lowering T-Mobile's infrastructure upgrade needs.

Verizon and AT&T are almost certain to follow suit eventually. That's usually what happens when a smaller carrier introduces consumer-friendly innovations that undermine the wireless industry's status quo . For example, minor-league player Alltel was first to market with voice-to-text messaging and "family circle" calling plans. Both of these became industry standards in short order, before being replaced by personal voice assistants and unlimited-everything plans.

But there's a window in between underdog introductions and industrywide adoption, where the innovator has a chance to snag subscribers from the slower-moving incumbents.

And it shows in T-Mobile's quarterly reports, as well as in its surging share prices.

In the four quarters between June 2013 and June 2014, T-Mobile gained 6.5 million wireless subscribers. That's a 15% year-over-year jump. Meanwhile, Verizon gained 4% or 5.3 million customers, and AT&T added 8.7 million accounts for an 8% jump. T-Mobile is playing in the same league as the big carriers now, and growing much faster on a percentage basis.

And in terms of investor returns, T-Mobile has scored a 22% gain since the summer of 2013 while both AT&T and Verizon showed negative returns. Investors appreciate the scrappy underdog, as long as its feisty tactics keep the subscriber additions coming.

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The article T-Mobile US, Inc. and Uncarrier 7.0: Are AT&T and Verizon Running Scared? originally appeared on

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days .We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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