AH Primetime: T-Mobile’s Marketing Genius, And How It Really Hasn’t Changed Anything

February 6, 2014 - Written By Patrick Northcraft

Ahhh… the wondrous T-Mobile.  If you think about it, a few short years ago no one really cared for them.  They were just another service provider that people went too, but they were much less popular than any of the others.  Then, a fantastic thing happened for them.  John Legere stepped up to the mantle of T-Mobile’s CEO, and ever since they have been making waves in the industry.  Simply put, he is a marketing genius.  He knows how to spin words and to make people listen.  T-Mobile added 4.4 million new postpaid customers in 2013, with 869,000 of them occurring just in Q4, which trumps their self-proclaimed biggest rival AT&T, who only brought in 566,000 in Q4.  The numbers prove that T-Mobile is growing, and the media is showing that T-Mobile is most definitely in the limelight, whether it be their antics at CES or the threat of a purchase by SoftBank.  As wonderful as it is to see an underdog rise up, it is imperative that we clear up the details.  In all of T-Mobile’s marketing campaigns, they have successfully convinced customers that they have removed contracts.  Technically, this is not true at all. Allow me to elaborate.

What T-Mobile has done here is changed the nomenclature of things.  Unless you come to T-Mobile with an unlocked, pre-purchased phone, or if you pay for it in full, you will be signing a contract with T-Mobile.  You are not on a service contract, though.  Let that be perfectly clear.  The contract is allowing you to pay for the phone over a certain period.  If you walk into a T-Mobile store or go to their website, what you see there is the total cost of the phone (for example, the Google Nexus 5 marked up to $396 dollars), the price you pay them up front should you choose not to pay for it in full (for the Nexus 5, $0.00) and the cost you will be agreeing to pay them over the next 24 months (again, for the Nexus 5, $16.50 as of the date of publication).  It is this last bit that is the reason nothing as really changed.  You will be signing a contract that states that you will pay T-Mobile the cost of the phone over a given period, and should you break that contract you are liable for the difference remaining.  By all rights, the only difference between this and the service contracts that were the standard a few years ago is simply the technicality as to where the money is going.  The principle still has not changed, regardless of what they may say in the marketing campaigns.

That isn’t to say that T-Mobile hasn’t made it easier for those of us who like to buy unlocked phones at full price and take it to them for service.  At Verizon or AT&T, you would pay the same prices as those who got their phone under contract, and with T-Mobile you will pay less as you will not be financing your phone over a given period.  Albeit T-Mobile has definitely mixed things up.  They offer the cheapest service on the market among the top carriers.  However it is important to realize that T-Mobile has not removed contracts… they have simply rebranded them.  It is marketing genius and it is certainly working, but they are still a form of contract nonetheless.