T-Mobile USA Alters M2M Market Dynamics with RACO Alliance

May 17, 2011 | Mobility Services
| Analyst: Kathryn Weldon

Event Summary

May 16, 2011 -- M2M MVNO RACO Wireless announced that it has been named by T-Mobile as its preferred provider for M2M sales and operations. T-Mobile’s national director of M2M, John Horn, will leave the carrier to become RACO’s president. T-Mobile is essentially outsourcing its M2M business to RACO, moving over most of its 25-person staff. T-Mobile is already the sole provider of M2M connectivity for RACO, although T-Mobile had sold through other MVNOs as well. T-Mobile claims the move will enhance its M2M offer, due in part to the benefits of RACO’s service platform, the Omega Management Suite.

Quick Take

Analytical Summary

• Current Perspective: Moderate on T-Mobile’s selection of RACO as its preferred partner, because it not only allows the carrier to stick with its primarily “wholesale connectivity” approach to M2M, but also outsources its business to an MNVO with direct customer relationships. The move also allows T-Mobile to leverage the RACO service platform, promising very rapid time-to-market intervals for new M2M customers. While RACO only re-sold T-Mobile connectivity anyway, this strategy is not a major shake-up, and it may help T-Mobile retain customers which may be scared of a commitment to a carrier that is possibly going to have its acquisition by a competitor (i.e., AT&T) finalized within a year.

• Vendor Importance: High to RACO; it fortifies the aggregator’s market position at a time when aggregators/MVNOs are struggling, as direct relationships with carriers are now typical for big M2M deals. The deal is of moderate importance to T-Mobile, as it still leads with connectivity and the Omega platform has the potential to deliver significant value. In addition, the uncertainty of the AT&T acquisition (as well as the separation of T-Mobile from Deutsche Telekom, a logical partner for global deals) may still concern potential customers.

• Market Impact: Moderate on the M2M market, as the move will have a high impact on T-Mobile’s remaining MVNO partners (e.g., Wyless, Jazz Wireless, and KORE Telematics), but its impact on the rest of the ecosystem is unclear. If the value of the Omega platform is as high as T-Mobile claims, it may have a big impact on other M2M platform vendors such as Jasper Wireless and nPhase (as well as Ericsson, which now owns the Telenor platform). It would also make T-Mobile a more effective competitor at a time when its M2M business faces defections (or loss of what would have been new business) due to uncertainty about the AT&T acquisition and the loss of its European parent.

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Current Perspective

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