Won Over By T-Mobile Marketing, Hispanic Customers Now Protesting AT&T Merger

When crafting a marketing strategy to attract a key demographic to your brand, make sure to play the "be careful what you wish for" adage close to the heart.

From establishing Hispanic-focused brand partnerships with FIFA soccer, to creating Latino-friendly retail locations, to specifically targeting members of the demographic to run its stores, T-Mobile has worked to assure it was culturally-positioned to capture Hispanic customers, who represent the fastest-growing segment of the American population.

The consumer-friendly price points of its cellular communication services, often leveraged as a marketing advantage over more prominent competitors Verizon and AT&T, have historically strengthened that rapport.

Recent US Census data reveals the median annual Hispanic family income to be more than $20,000 less than that for the population at large, but Hispanics rely more than any other ethnic demographic on cell phone services. By providing Hispanic customers, on average, with lower bills than any of the other major networks, T-Mobile continues to stand out as attractive.

In serving as this "knight in shining armor" to protect customers from some of the harmful excesses of the telecommunications industry, T-Mobile’s customer base has skewed disproportionately Hispanic—while only 10-12% of the Verizon and AT&T audiences are Hispanic, 25% of T-Mobile’s share fits the bill. Clearly, T-Mobile’s marketing strategy was successful—it has built customer loyalty with the ethnic group.

Because of that loyalty from Hispanic consumers who see T-Mobile’s market presence as essential to telecom, AT&T’s planned takeover (and ultimate elimination of T-Mobile as a separate brand) has the National Hispanic Media Coalition fuming.

The group is openly protesting the merger, calling attention to its negative potential impact on Hispanics and consumers at large.

"Consumers, especially migrant consumers, as many Latino workers are, rely on national providers to assure they can connect no matter their locale," explains the Coalition’s President Alex Nogales in a video. "These folks would be forced to select from one of only three providers [Verizon, AT&T or Sprint]. Less competition would lead to higher prices, fewer choices and poor customer service…at a time when we can least afford it.

"This would disproportionately harm Latino consumers. Latinos, more than any other group, rely on cell phones. With 25% of Latinos below the poverty line, higher prices would be devastating."

Already, the market dominance of AT&T and Verizon has enabled price hikes for services that are simultaneously becoming broad necessities for mobile customers. As of press time, both, for instance, had discontinued offering unlimited data transfer at the once-standard ~$30 price point, thereby significantly escalating the "per gigabyte" cost.

Nogales, therefore, has reason to worry that giving a powerhouse wireless carrier even more control of the market would produce price increases and service decreases. And given their typically-lower incomes, Hispanic customers are seemingly justified in sharing that concern.

Yet in assessing the impact of the AT&T-T-Mobile merger, Nogales seems to be overlooking another dimension of the Hispanic market’s importance in the mobile industry.

Namely, if the demographic was important enough to warrant a comprehensive marketing strategy from T-Mobile and is important enough to justify government opposition to the merger, why should it be assumed that Hispanics will simply get the shaft post-merger, especially since the already-sizable Hispanic market will only grow moving forward and consequently become more and more of a priority to consumer-facing businesses?

Yes, the loss of an alternative carrier in T-Mobile gives AT&T and Verizon more market control and thus more ability to dictate price.

But it also means that millions of customers, previously loyal to a provider that catered to its cultural and economic needs, will ultimately be available to select the provider that best serves their interests.

Given how strongly Nogales believes Hispanics rely on cell phones, it is likely something of a fantasy to suggest they carry meaningful enough leverage to truly combat price hikes from Verizon and AT&T. Still, Verizon and AT&T are going to want long-term loyalty from this rapidly-growing market, and that means they cannot afford to simply throw the needs of Hispanics by the wayside.

And why is Sprint absent from the bulk of the National Hispanic Media Coalition’s argumentation? Since the merger would center even more market influence between Verizon and AT&T, Sprint will conceivably be under even more pressure to create competitive advantages. If AT&T and Verizon prove willing to ignore the needs of such a vast ethnic demographic, Sprint would be insane not to capitalize on the opportunity by aggressively marketing to Hispanics.

As it is, Sprint has already indicated its commitment to the Hispanic community. While the Coalition’s protest particularly identifies T-Mobile as valuable to Hispanics, Sprint, too, has made a name for itself within the demographic. It has won multiple awards for its Hispanic-friendly business practices.

In preferring T-Mobile to wider carriers like AT&T and Verizon, Hispanics have shown that they will not necessarily be "bossed around" by the entities in possession of the most market influence. They will look to the providers whose practices make the most sense, a fact that gives Sprint (both its subscription and prepaid services) and other, smaller networks like MetroPCS the chance to capture their interest.

Market-transforming circumstances, such as the planned AT&T-T-Mobile merger, thus have a unique impact on the Hispanic market. On the one hand, any developments that can result in higher prices, fewer jobs and weaker service are going to have amplified consequences on Hispanics, who garner annual incomes below the national mean.

On the other hand, the fact that Hispanics represent an increasingly-influential segment of the market will also provide amplified immunity to these consequences, since their needs as customers will only grow as priorities for businesses.

Data, from various sources including Nielsen, cited as repurposed by the NHMC.