Have you been paying attention to what T-Mobile has been doing over the last year or so? The smallest of the largest carriers in the U.S. has been on a tear in an attempt to change the entire wireless industry.
After the botched merger with AT&T, T-Mobile’s CEO John Legere took the reins in an attempt to bring the carrier back into the spotlight.
The first move was to announce the carrier was doing away with contracts. Traditionally, as you know, the wireless industry has subsidized the cost of devices in exchange for customers signing contracts. Originally it was a one year contract, then as devices became more expensive (and the carriers became greedy) the contracts were extended out to two years. Legere and team decided contracts needed to go, so they went. They also decided to get rid of tiered and shared data plans, providing customers with unlimited service. The move, however, required customers to pay full price for a device. This was a hurdle and mental roadblock for customers it had to find a way to overcome.
A few months later, T-Mobile announced it was going to add another layer to its Uncarrier approach by letting customers upgrade every six months. The program, called Jump, would ask for some form of downpayment towards the full price of a new device, with the remaining balance being split over the course of 24-months. You can leave T-Mobile at any time, you just need to pay the remaining balance on your device before you do. In a sense, it’s akin to a contract, just without the “contract” label.
To say Jump was a shock to the wireless industry is an understatement. No contracts, unlimited data and the ability to upgrade to a new device every six months? Unheard of.
But something interesting started to happen after Jump was announced. AT&T and Verizon began working on similar plans. Eventually AT&T announced Next, its version of a no-contract, upgrade-anytime-you-want plan. And Verizon announced Edge, its spin on the same concept. Later Sprint announced a similar plan, which it then revamped into a Framily (yes, that’s the real name), and an Easy Pay program for devices.
The thing the two larger carriers (AT&T and Verizon) didn’t do was to lower the cost of monthly price plans. Carriers recoup the cost of the subsidy for your device when you sign a contract and pay a higher monthly fee. So it only makes sense when the subsidy is no longer present, that the carrier lowers the cost of monthly service. T-Mobile did this in its announcement of Uncarrier 1.0 and unlimited data with no more contracts.
Instead of doing the right thing, Verizon and AT&T stuck with the subsidy still included in monthly plans, while at the same time bragging about how each of the respective plans were better than T-Mobile’s. The negative press over forcing a customer to still pay the higher cost for a price plan eventually forced AT&T to announced new plans, specifically for customers on the Next program, saving $15 a month.
Uncarrier 2.0 was a success for the entire industry.
T-Mobile later announced Uncarrier 3.0, where the standard unlimited price plan also included global roaming for text and data, at no additional charge. Meaning you could travel to over 100 different countries across the globe and not have to worry about coming home to a massive roaming bill. Again, something that was unheard of at the time.
Then towards the end of 2013, John Legere took to Twitter (something he often does) to announce T-Mobile would be announcing Uncarrier 4.0 during the International Consumer Electronics Show in Las Vegas early in January. Rumors soon started to circulate that T-Mobile was going to start paying early termination fees (ETFs) for those customers who were currently under contract at another carrier, if they made the jump to T-Mobile.
Contracts at other carriers was a huge problem for T-Mobile. The plans and services announced over the course of the last year may sound fantastic and make someone want to switch, but those pesky contracts had people locked up. The problem grew if a family, all with different contract end dates, wanted to switch to T-Mobile. Switching one-by-one as contracts expire isn’t cost effective, or something most families will want to do.
With those hurdles in mind, Uncarrier 4.0 was announced. T-Mobile will pay you for your current device on another carrier, and pay the ETFs for up to five lines when you turn in your current device, purchase a new device (on a 24-month payment plan, with $0 down) directly from T-Mobile, and sign up for service with the Uncarrier.
In a sense, T-Mobile not only did away with contracts for its customers, but it also rid the entire industry of contracts. By buying out contracts for individuals and families, those who have found the moves made by T-Mobile to be appealing were now free to switch carriers at any given time. In fear of repeating myself: unheard of.
Shortly after the move to pay ETFs was announced, AT&T announced anyone who was currently under contract would have the ability to switch to its Next (read: no contract) program, regardless of the contract end date (as long as six months of service had been completed).
Saying T-Mobile is having a huge impact on the wireless industry is the understatement of 2013 and what’s shaping up to be 2014.
The wireless industry is screwed up, it has been for a long time. John Legere is imparting change and trying to rid it of the nuances and flat out ripoffs forced onto customers by carriers. T-Mobile is far from perfect, its service especially here in Southern Colorado is questionable at best, but I have a feeling the longer John Legere is at the helm, the more change and impact his underdog company is going to have on the entire industry. Hell, even if John Legere decides to move on and fix another industry (the cable industry would be ideal), I don’t care. He has changed the wireless industry and we, as customers, are going to be benefitting from it for a long time.