T-Mobile Quits Carrier Conspiracy
At T-Mobile’s “Uncarrier” event on Tuesday, John Legere turned heads and dropped jaws with several major announcements and a few choice words. “Stop the bull$#%#!” became his rallying cry as he challenged the traditional model of cell phone service contracts, describing them as “smartphone hell.”
Under the typical 2-year service contract, a carrier subsidizes your phone, so you pay less out-of-pocket. But, the carrier more than recoups that cost in monthly fees, even long after you’ve “paid off” your phone. T-Mobile satirizes this form of “robbery” in the following video:
Better Ingredients, Better Carrier
I have to admit; I like to see companies own up to their mistakes (which is often code for “years of systematic unethical and/or profit-centric business practices”), so Legere’s refreshing speech gives me some goodwill towards T-Mobile. It reminds me of when Domino’s Pizza admitted their pizza was terrible (tied for last place with Chuck E. Cheese’s in polls) and reinvented their product and recipe, a move that was very well-received by customers. T-Mobile is taking a similar (but less self-flagellating) approach, implying that they were part of the problem but focusing more on the idea that they’re cleaning up their act.
So now, T-Mobile is tearing up the annual contract model and starting fresh with “Simple Choice” plans, which separate the costs of the phone and the service. Each service plan has unlimited talk and text, as well as technically unlimited data, in the sense that they’re doing away with data overage charges. However, the lower tier plans will throttle data users down to 2G speeds after they’ve reached a certain limit. You can see how their plans compare to the competition on this graph (link). As for the phone itself, you can bring your own unlocked phone and just pay for the service, or you can buy one with a low down payment and pay it off in small monthly installments.
Legere went on to speak about the company’s new LTE network, announce the coming of the iPhone to T-Mobile, and discuss the finer points of their new strategy. Here’s Billy Crystal—I mean, John Legere—to tell you more about it himself:
What Happens Next?
It’s hard to say what the long-term effects of this will be—now that T-Mobile has broken the oligopoly pact, will the other carriers feel the pressure to abandon annual contracts as well, or will they try to appease subscribers in other ways? Or will they just wait and see what happens with T-Mobile, first? You can bet they’re not happy, though—T-Mobile is making waves in the pool they police so carefully, splashing away portions of their treasured profits.
Personally, I think I’m okay with that. How about you?