The tension within the American telecommunication market was clearly reinforced on Wednesday 8th January when T-Mobile CEO John Lagere revealed their latest Un-carrier move. During a CES conference in Las Vegas, Lagere announced that T-Mobile will now offer the possibilities for customers to be free from any annual contracts and family service plan packages. Lagere actually used this metaphor of giving back Freedom to the people by saying: “We’re giving families a ‘Get Out of Jail Free Card’. Carriers have counted on staggered contract end dates and hefty early termination fees to keep people bound to them forever. But now families can switch to T-Mobile without paying a single red cent to leave them behind.” Very American, indeed.
What does T-Mobile Un-carrier option really means? Customers from one of the three major carriers (Verizon, AT&T, Sprint) who hand over their “eligible” devices (no more information has been given in regard to what an “eligible” device means but surely old-old phones will not receive the same treatment as recent ones) at one of T-Mobile location and switch to a postpaid Simple Choice Plan with unlimited talk, text and data, will receive a credit up to $300 based on the value of their phone. But to do so, customers will also have to purchase one of the company devices. Once the termination process with their ex-carrier has been finalized, customers will have to send the final bill to T-Mobile who will then send an additional payment of up to $350 per line to pay the fees off.
Since he has been appointed CEO, Lagere’s goal has been “to upset the longstanding US status quo of subsidized phones, long-terms contracts and termination fees”. His latest announcement is still going in that direction: “What we’re doing is ending contracts, forever, for everybody. We’re trying to change the industry completely.”
Meanwhile, the Un-carrier Move is popular. According to the company, 1.645 million new customers have been registered over the last quarter; and the total of those last 12 months goes up to 4.4 millions new customers. T-Mobile now has 46.7 million customers on its prepaid and postpaid plans. Lagere claimed “We have clearly struck a chord with customers and will continue to look for ways to expand on that in 2014.”
AT&T tried to compete with T-Mobile latest offer with a tiny less advantageous option. AT&T offers to T-Mobile customers only $250 for their phone (when T-Mobile offered $300) and $200 credit for early termination (when T-Mobile offered $300). It is a battle. Lagere even suggested that customers use AT&T’s offer at $450 as an insurance policy when they switch to T-Mobile: “If it doesn’t work they’ll pay you to come back.” And at the moment, T-Mobile is winning that battle.
To a question about its confrontational approach, Lagere answered: “It’s fun to win. It’s even more fun when somebody loses and hurts while you’re doing it.” And one last funny event highlighting again the tension between the two carriers was when Lagere attended, as a guest of headlining rapper Macklemore, AT&T CES kickoff party and was apparently kicked off the party. The day after, at T-Mobile’s announcement, Lagere held up a t-shirt printed with his image and the caption “I just wanted to hear Macklemore.”
The Register – T-MobileSlate US: AT&T’s contract buyout deal is so ‘desperate’, we’ll do it too
Reuters – T-Mobile US customer growth strong, offers cash to switch
Wall Street Journal – T-Mobile Delivers Contract Freedom for Families By Paying Off Early Termination Fees
Slate – Is This the End of Horrible Long-Term Cellphone Contracts?