T-Mobile Ends Employer Rate-Plan Discounts
T-Mobile is focused on being transparent and bringing “true fairness and freedom” to the wireless industry, and so it’s doing away with employer rate-plan discounts, CEO John Legere announced in a March 28 blog post.
Starting April 1, T-Mobile will instead offer business partner employees a “reward card” worth $25 each time they purchase a new device.
“The old programs were designed to help big carriers close big corporate contracts, with employees as bargaining chips,” wrote Legere. “We aren’t playing that game anymore. This change is about simplifying wireless for everyone … including employees of small and large companies alike.”
Legere added, “The other guys’ best plans with fat corporate discounts still can’t match the value of our Simple Choice plan. We offer the best deal in wireless. Period.”
Still, it’s unclear how much of a discount the employees of corporate customers were enjoying, and it’s hard to imagine that a $25 card—or even $50, in the case of someone upgrading a device twice a year—is equal to the annual savings enjoyed on an employer discount plan.
The Verge calls the T-Mobile policy change a “substantial blow” to customers, who were likely saving between 5 and 30 percent. The more employees on a plan, the larger the discount the carrier offered.
While the T-Mobile change may indeed be shedding light on a too-dim area, it may also help the carrier with its bottom line.
T-Mobile announced Feb. 25 that it added 4.4 million customers during 2013, a dramatic turnaround from the 1 million it added during all of 2012 and the 706,000 it lost during the fourth quarter of 2011 alone.
“We’re now the fastest-growing wireless company,” Legere said during the earnings call.
Those new customers, and the 180-degree turn in T-Mobile’s brand appeal, however, have come at a price. While T-Mobile grew its revenue 39 percent year-over-year, to $6.8 billion, it posted a loss of $20 million.
In January, T-Mobile began offering as much as $650 a line to anyone who wanted to switch from a top-tier carrier to T-Mobile, but executives have insisted that cost is well worth the customer gains.
“The quality of these customers is terrific,” Chief Marketing Officer Mike Siefert said during the earnings call. “There’s a cost to bring them in. … We expect the payment for each of them to be $200, maybe less over time … but that’s offset [by the quality of the customers.]”
T-Mobile this year also stopped tying its wireless service to two-year contracts, separated service plans from device pricing, began offering monthly device financing, and began giving away 200MB of data a month to anyone with a tablet who can access its network.
“A year ago, I promised we’d change this industry, and this is just one more step in the movement,” Legere said in his post. “We’re not done yet. Stay tuned.”