Is This the End of Horrible Long-Term Cellphone Contracts?
Photo by John Moore/Getty Images
T-Mobile just fired the loudest shot yet in the suddenly frenzied battle than is shaking the U.S. wireless-carrier industry.
In a brash and almost comically profane press conference at the
Consumer Electronics Show in Las Vegas on Wednesday, bad-boy CEO John
Legere urged customers of the other three major carriers to break their
contracts and switch to T-Mobile—and offered to pay their termination
fees in full if they trade in their phones and buy a new one. The
company did not immediately provide all the fine print, but said it
would pay customers' fees, up to $350 per line, on top of a credit of up
to $300 for trading in their phone. That's a potential total
reimbursement of $650.
The idea of dangling a wad of Benjamins at customers who switch
carriers isn’t entirely new. Perhaps in anticipation of T-Mobile’s move,
AT&T last week began offering up to $450 specifically to T-Mobile customers who trade in their phones and switch to AT&T’s “Next” installment plan.
On closer inspection, neither company is exactly giving away free
money. Both deals require customers to buy new phones at full price—that
is, without the deep subsidies you usually get when you sign up for a
two-year contract. Still, it’s easy to imagine circumstances in which
both T-Mobile’s and AT&T’s offers make a lot of sense for certain
customers.
But Legere insisted that this is more than just a battle of one-time promotions. Unlike AT&T’s “limited-time offer,” T-Mobile’s offer does not just apply to customers of one rival, and Legere said it’s intended to be permanent.
“What we’re doing is ending contracts, forever, for everybody,”
Legere said, in one of his few statements that did not contain a curse
word or a reference to bodily functions. “We’re trying to change the
industry completely.”
Screenshot
It's fair to point out that T-Mobile is to some extent just shifting
costs around—they’ll pay your early termination fee, but then you have
to buy a new phone at full price. In general, the wisest move in
wireless service is to choose the provider with the best coverage for
your needs, not the one offering the splashiest discount.
But there's a deeper change at stake here. Almost from the start of
his tenure at the company, Legere has made it his goal to upset the
convoluted yet longstanding U.S. status quo of subsidized phones,
long-term contracts, and termination fees. At this point, it’s pretty
clear that he’s achieved that. Moreover, he has succeeded in goading a
rival nearly twice T-Mobile’s size into a down-and-dirty dogfight for
customers. And the numbers suggest T-Mobile is winning—it has added more
wireless customers than any of its main competitors over the past three
quarters.
It’s clear Legere is relishing the competition. “It’s fun to win,” he
said in response to a reporter’s question about his confrontational
approach. “It’s even more fun when somebody loses and hurts while you’re
doing it.”
Perhaps the lowest blow of all, for AT&T, was Legere’s suggestion
that customers use AT&T’s own $450 promotion as an insurance policy
when they make the switch to T-Mobile. “AT&T has given us almost
like a no-fault guarantee,” he boasted. “Come over, try (our) network,
and these pricks will pay you to come back if it doesn’t work.”
No comments:
Post a Comment
Please leave a comment-- or suggestions, particularly of topics and places you'd like to see covered