T-Mobile Sets Its Sights on Machine-to-Machine Communication

T-Mobile's latest move is helping it catch up in the burgeoning machine-to-machine communication industry.

Feb 22, 2014 at 2:30PM

This week, T-Mobile (NASDAQ:TMUS) made yet another "un-carrier" move by dropping roaming charges between the United States and Canada for machine-to-machine (M2M) devices. This means companies moving equipment or fleets between the two countries can communicate with their equipment on T-Mobile's network and pay local connection fees instead of the higher roaming charges.

Investors may be wondering how this effects the company's bottom line, but a better way of looking at it would be how T-Mobile is positioning itself for the highly connected Internet of Things world.

T Mobile
Source: T-Mobile. 

How it works
The company's new eSIM is at the core of the free roaming plan within the U.S. and Canada. The new SIM cards allow devices to act as if they're on a local network, thus avoiding any pesky roaming charges.

T-Mobile described a business scenario in a recent press release, saying that a trucking company using data for mapping services, video monitoring, tracking the fleet, and vehicle diagnostics wouldn't have to pay roaming charges when traveling between the two countries -- which could cost up to $2,400 per year for each truck.

T-Mobile's eSIM eliminates the roaming charges by using its carrier's network in the U.S. and international partners, so business don't have to swap out SIM cards or make changes to data plans.

Why give away free roaming?
T-Mobile is no stranger to bold moves, and giving away free roaming for M2M communication seems right up its alley. But the bigger picture is that T-Mobile is a bit behind other carriers in the machine-to-machine industry.

For example, AT&T (NYSE:T) just set up a partnership with IBM to help cities and utility companies build out M2M systems that will improve traffic patterns, utility usage, and help with city planning. The companies are teaming up to save money for connected cities, and AT&T is leading the wireless communication strategy.

AT&T also started working with General Electric back in October to connect industrial equipment to the carrier's cloud network. That connection will help GE manage its transportation units and determine when trains, planes, and other equipment need maintenance. On top of all this, the carrier also launched two new Internet of Things foundries this past summer, with one focused entirely on machine-to-machine research.

Foolish final thoughts
T-Mobile's introduction of eSIMs and free M2M roaming in Canada and the U.S. isn't going to make the company, or investors, much money right now. Instead, T-Mobile is trying to get itself into a better position for when M2M really takes off. The company said free roaming will be added to additional countries sometime this year, which will hopefully solidify T-Mobile as a suitable carrier in the Internet of Things. As M2M becomes more prolific, companies are going to look to carriers with strong and reliable networks, and who can communicate essential machine-to-machine data. T-Mobile may not be there quite yet, but its latest move is a good start.

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Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company and International Business Machines. 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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