T-Mobile ‘Slains’ the Goliaths of the Carriers

February 27, 2014 - Written By Cory McNutt

I have to confess that I am not a T-Mobile fan as my carrier – my favorite carrier is the one that offers me the most coverage where I live, work, and travel and T-Mobile does not satisfy that criteria.  However, when it comes to shaking up an industry that is long overdue for a shake up, I adore T-Mobile, because they have done more in the past year to make the carrier business just a little bit friendlier – and this ‘friendliness’ is finally having a trickle-down effect on its biggest competitors.  Verizon, AT&T, and Sprint resisted, but one-by-one they all have succumbed, one way or another.

Surprisingly, we have the U.S. Federal Government to thank for it, because in 2011 the Federal Trade Commission (FTC) and the Justice Department blocked the $39 billion AT&T takeover of T-Mobile.  This allowed the struggling fourth largest carrier and their outspoken CEO John Legere to start a sequence of events that will forever change that way carriers conduct business with their customers.  Some of the best ideas are born out of the necessity to survive and in order to attract new customers T-Mobile was forced to finally address the many concerns of its customers and start acting in a manner to fix those apprehensions.

T-Mobile started by dropping the traditional two-year contract in their ‘uncarrier’ campaign – and while it is true you no longer need to sign a two-year contract to stay with T-Mobile, if you leave before your two years are up you are still obligated to pay off your device. So you must ante up the balance of your device payments, so in essence you will more than likely stay with them the full two years – but a nice way to promote the idea.

T-Mobile has also dropped their Early Termination Fees (ETF), overage charges, and a few other ‘goodies’ that carriers would use to keep you from leaving – or at least make you think twice about it.  They also added to that the ability for all customers traveling in 100 countries to text for free using the web.  In order to entice you to come over to T-Mobile they have even offered to pay your ETFs the other carriers would impose on you for leaving them.

They also introduced the ‘unbundled’ pricing that separated the amount that you pay for your carrier services from the amount of your device – so in other words, after your device is paid for and if you do not want to upgrade your device, you monthly payment would actually go down because you would no longer be paying for the device.  However, with their new JUMP! Program, if you are the type that likes to switch your device, you no longer have to wait the two years – you can swap out your device every six months, with some restrictions, of course.

The three major carriers sat back and waited, but then made their moves out of necessity – the moves T-Mobile made were just so logical that the other carriers had no choice but to follow T-Mobile’s lead or else look bad in the eyes of the consumers.  In December, AT&T updated their plans to include a contract-free option.  The goliath themselves, Verizon, waited even longer, but soon offered a new set of plans, although as expected, they are not near as flexible or cost effective…my, my, what are they afraid will happen?  All the carriers now offer early upgrade options for their customers, thanks to T-Mobile.

T-Mobile’s bold moves seem to be working for them to a degree at this point.  In the past year, they have attracted four million new customers, but cost-cuts have eaten into their bottom line with a loss of $20 million in the fourth quarter, up from $8 million last year, although Legere does not seemed too bothered by the results.  Analysts say that if its larger competitors would match T-Mobile, that eventually T-Mobile will be unable to invest in their network upgrades or that they are using this ploy to increase their customer base to look more attractive for Sprint to buyout their competitor.  However, their performance this past year could give pause to Government officials to allow that sale given T-Mobile’s positive effect on the industry.

Let us know on our Google+ Page what you think about T-Mobile’s moves this past year – have you jumped over to them or are you staying with your current carrier?