T-Mobile Offers to Pay Early Termination Fees for Customers Who Switch
Say what you will about John Legere, but the man sure knows how to make a statement.
When not getting kicked out of competitors’ parties, the T-Mobile CEO is making moves to shake up the wireless industry, from eliminating long-term contracts to launching a $10-per-month early upgrade program. The latest act for the “un-carrier”? Paying early termination fees for customers who want to switch to T-Mobile.
Announced today at CES, T-Mobile will pay the ETFs for individuals and families (up to five lines) who move over from AT&T, Sprint or Verizon to its service. T-Mobile said the the value of the offer could be as high as $650 per line. But there are a few caveats.
First, you will need to trade in your old phone. At that time, you’ll get an instant credit of up to $300 for the device. Next, you’ll need to buy a new T-Mobile phone, and sign up for one of the carrier’s Simple Choice plans. But the carrier won’t pay for your ETF upfront. Intsead, you will need to send in your final bill from your old carrier showing the ETF to T-Mobile either via mail or email, and then the carrier will send you a prepaid MasterCard for the amount of your ETF (up to $350).
Still, T-Mobile believes the new plan addresses another customer pain point and will help spur another change in the industry.
“Whenever somebody is not doing well, customers should be able to pick up and leave,” said Legere. “ETFs are just another form of phone subsidy. … It’s part of the overall industry scam. There’s no transparency. And what we are going to do is force the industry to get healthier. Force the industry to change. I want every customer to have constant, complete choice.”
So far T-Mobile’s un-carrier moves seem to working, as they have helped the No. 4 carrier gain market share.
Legere revealed at the event that T-Mobile had added more than 1.6 million new customers in Q4 — a stark contrast from the 515,000 postpaid customers it lost the same time last year. In total, the carrier added 4.4 million new subscribers in 2013.
T-Mobile’s competitors are also taking notice.
Late last week, AT&T made a pre-emptive strike by offering T-Mobile customers up to $450 in credit to switch to AT&T. In an interview with Re/code’s Ina Fried, AT&T Mobility CEO Ralph de la Vega said the company wanted to provide incentive for customers to come and experience the reliability and speed of its network.
But Legere called the deal a “desperate move” by AT&T and said customers would not be fooled by it. Also, unlike AT&T’s offer and other similar promotions, T-Mobile’s plan is permanent.
“It’s going to be the end of contracts,” said Legere. “Once you get through these ETFs, the contract world will go away and then we will move to something healthier.”
Meanwhile, Sprint used CES to introduce a new twist on the family plan.
Historically, family plans have offered a lower-priced option for consumers with multiple lines. A household of customers on one carrier is far less likely to jump ship for a rival.
The downside comes when that single bill arrives. If a couple splits or one family member racks up large charges, family plans can end up being a big pain.
Sprint’s answer is the Framily Plan. Introduced on Tuesday, it lets up to 10 people sign up for service together, providing savings for multiple lines while also allowing separate billing for any members of the group who want it.
Service starts at $55 per month for the first line of service and goes down $5 per month for each additional Framily member, up to a maximum discount of $30 per line. That price includes one gigabyte of data per person, though customers can also pay $20 more per month and get unlimited data as well as the option to get a new phone each year.
Ina Fried contributed to this report.
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