T-Mobile recently took a big step, deciding to forgo the traditional subsidized contract model. Instead, they’ve taken a fresh approach to providing cellular service to the US… one that will define them moving forward. We were all excited when it happened, but waited patiently to see if it would really take hold.
As 600,000 new T-Mobile subscribers will attest to, it works just fine. T-Mobile has a positive customer flow for the first time in a while, and it’s only looking up for them. Industry praise, a pending merger with Metro PCS, and a fresh identity promise to push T-Mobile into the future.
We reached out to T-Mobile to find out just what all this meant for them, us as consumers, and their future. Not surprisingly, they were really excited about this ‘un-carrier’ approach, and seemed even more thrilled that we, as their customers, liked it.
Why did T-Mobile do this? Why ‘buck the trend’ and ditch the traditional subsidized model?
It was time for a change. The industry has evolved so much from a technology standpoint, and consumers clearly love what smartphones and other wireless devices can do for them. But while the technology has advanced, this industry has continued to cling to antiquated ways of doing business, from restrictive annual service contracts to ridiculous overages and fees on the data you use to limits on when you can upgrade to contracts that are almost indecipherable. None of it makes sense to customers, who have become very frustrated with the utility-like way in which the wireless industry conducts itself. So T-Mobile announced a series of moves to address consumer frustration with the unnecessary cost and complexity of wireless, including removing the requirement that customers sign annual service contracts.
You’ve seen an uptick in customers recently. Did you expect this much positive reaction?
We couldn’t be more pleased with the response we’ve seen, which has actually exceeded our expectations. As word of what we were doing started to circulate, we saw a pretty solid increase in customer interest in T-Mobile.
It’s so different, and probably has some a bit confused. How are employees, on the store level, dealing with this?
No doubt, there will be some education involved. The industry has done a great job of convincing customers they’re actually buying their smartphones for $200 total when, in fact, the actual cost is just hidden in higher monthly wireless bills. We have a stronger story. When you sit down and do the math, it’s clear you can save hundreds of dollars with our approach compared to the traditional restrictive annual service contract model trumpeted by the competition.
Does this affect T-Mobile getting great devices?
Part of what we announced in New York was our commitment to provide customers with the lowest up-front costs on the most popular smartphones. Because T-Mobile is the only major U.S. wireless company to stop requiring consumers to sign annual service contracts, our customers have far more flexibility with how they buy and use wireless devices. That will drive demand, and device makers will want to have their product on our shelves.
We also announced that in the coming weeks, we will have several 4G LTE-capable devices available, including iPhone 5, Samsung Galaxy S 4, BlackBerry Z10, HTC One, and T-Mobile Sonic 2.0 Mobile HotSpot LTE – delivering on our promise to offer a diverse and amazing lineup of devices for our customers.
The T-Mobile merger with Metro PCS is still looming on the horizon. How does this new ‘un-carrier’ approach affect that?
This about the T-Mobile brand and how we are radically simplifying wireless for American consumers. The wireless industry is broken. You see proof of that all around you in the form of long-term contracts, overage penalties, and termination fees. We announced a strategy in New York to help reverse all of that. You can count on that just being a start. We’re going to do an awful lot of things very direct, very meaningful and in ways you wouldn’t expect from a phone company. We’re not in phone company business; we’re in the changing-the-phone-company business.
It can’t be stated enough, just how significant this is. For a carrier to completely move away from subsidizing devices is a very bold strategy. It was a gamble that has paid off, and that’s good for everyone. Whether you love their approach or not, T-Mobile has, at least, become more transparent about how they do business with consumers.
Giving up on locking people down shows a trust in what you’re doing, and the service you provide. T-Mobile has clearly grown tired of the status quo, as have many consumers. That huge uptick in subscribers isn’t a coincidence, and only promises to rise as contracts with other carriers expire.
In closing, I asked one simple question of T-Mobile. I wanted to know what they wanted us, as consumers, to take away from all of this. Their response to me was “Life just got much simpler.”
Yes. Yes it did.