Calling T-Mobile an ‘un-carrier’ is like calling Congress an ‘un-politician’ – when in fact they are probably more of a carrier than any of the others. They simply hide behind a fa§ade of truly caring for their customers and have a loud-mouthed CEO, John Legere, reminding everybody just how friendly and caring they are. He declares how evil all of the other carriers treat their customers, when all the while, T-Mobile and Legere would like to be just like a Verizon or AT&T…if that doesn’t sound like politics, I don’t know what does. This kind of tactic will work for only so long – so long as they can play the chided underdog, but once they build up their customer base, the prices will increase and the once cared for customer will soon realize that the ‘caring parental’ approach was only a smokescreen. You cannot fault T-Mobile for doing this – it’s called business.
True to form, T-Mobile announced yesterday that they added 2.4 million net subscribers during the first quarter of 2014, when the year before they were losing customers right and left. All of this growth happened as Sprint continued to lose customers, Verizon barely grew in customers and AT&T added over 1 million subscribers – after they started to run some plays from T-Mobile’s playbook. In the past year, T-Mobile has transformed itself into a ‘customer friendly” carrier and by doing what no self-respecting parent would do – they allowed their customers to have whatever they wanted. It’s not like all of the other carriers don’t know what we, as customers, want – no ETFs, unlimited data, no contracts, overseas coverage and the lowest prices possible. You can give only so much, especially when you are in business and must satisfy your investors, and eventually you have to start pulling in the reins. If you pull them slow enough, nobody will hardly notice and that is what T-Mobile hopes will happen.
You see, during all of this tremendous growth in customers, T-Mobile lost $151 million and is still a struggling business. In order to maintain those new customers T-Mobile must expand their LTE network and coverage, and this costs money. Ironically, they get a big boost in this respect back in 2011 when AT&T tried to buy T-Mobile and the government would hear nothing of it. Part of that breakup deal forced, AT&T had to pay T-Mobile $3 billion as well as give them some wireless spectrum and T-Mobile used those assets to expand and improve their network into one of the fastest LTE networks in the U.S.
They went from paying the early termination fees (ETF) of customers willing to jump over to T-Mobile – eliminated the normal two-year contracts (although you are still tied in for two years if you are paying off your new device or you can leave if you are willing to pay the balance in a lump sum) – it doesn’t charge extra if you go over your data cap, it just throttles your speed – and gives you International data and texting, but at a slower speed. At the earnings call, Legere, indicated that things may be changing as they work their way back to being a carrier once again. In March, T-Mobile’s CFO Braxton Carter announced that they raised their Unlimited Plans by $10 per month to help ‘recoup investments.’ According to Business Insider, “CEO John Legere said the carrier increased the cost of its unlimited data plan as a way to show it can generate more revenue from its highest-paying customers.”
In business, you can only be so ‘friendly’ to your customers – there comes a time when you have to make money for expansion, new equipment, to maintain your network and pay investors. I think it will soon start to become quite apparent that once everybody runs to T-Mobile, they will start to flex their muscles even more and we will slowly see prices rise and data limits lowered. A fairytale can last only so long before you are awakened to face reality. Please let us know on our Google+ Page what you think of T-Mobile – have you made the jump or thinking about it…as always we would love to hear from you.