T-Mobile Rips Up Final Contract, Offering to Pay Switchers' ETFs

By Michelle Maisto  |  Posted 2014-01-08

T-Mobile Rips Up Final Contract, Offering to Pay Switchers' ETFs

T-Mobile, as expected, announced it will pay individuals and families to switch from AT&T, Verizon or Sprint to its network.

"It's not a promotion; it's not a switching gimmick. It's the end of contracts," said Chief Marketing Officer Mike Sievert during a Jan. 8 press event at the International Consumer Electronics Show (CES).

Starting Jan. 9, T-Mobile will pay up to $350 per line in early-termination fees (ETFs).

"With an eligible phone trade-in, the total value of the offer to switch to T-Mobile could be as high as $650 per line," T-Mobile said in a statement. It will pay the fees for up to a family of four.

T-Mobile will pay up $300 to anyone who trades in an eligible phone and switches to a postpaid Simple Choice plan. After she receives her last bill from her old carrier, she can mail it to T-Mobile or upload it to www.switch2tmobile.com and T-Mobile will pay off the bill, up to $350 per line.

CEO John Legere laughed off the idea that AT&T's Jan. 3 offer—to, for a limited time, pay up to $450 per line to T-Mobile customers who switch to AT&T and trade in an eligible smartphone—wasn't in response to T-Mobile's planned announcement.

"AT&T is a total source of amusement … they take the bait every time," said Legere, imitating AT&T leadership's efforts to position the offer as simply something good for customers. "Why don't you have the [guts] to answer the question?"

Legere later threw out figures, stating how much more a family of four would pay on AT&T, for a limited amount of data, than on T-Mobile with unlimited data (though not all of it at 4G speeds).

"My suggestion is that everyone take our plan. If it doesn't work, then take AT&T's plan!" said Legere, fired up by likely a mix of enthusiasm and the Red Bull he brought on stage with him.

"If our plan doesn't work for you, they'll pay you to come back. AT&T has given us almost a no-fault guarantee. These [guys] will pay you to come back!" Legere continued, clearly delighted by the idea of his rivals essentially tangled in a trap they'd set for him.

During the press event, T-Mobile's leadership applauded Verizon's frankness about some of its weakness, panned AT&T relentlessly as being lame and ridiculous, and dismissed Sprint as being (put more kindly for print) lost in its endless construction dust.

T-Mobile Rips Up Final Contract, Offering to Pay Switchers' ETFs

During a question-and-answer session, Legere—acknowledging he should probably say no comment—addressed the rumors of Sprint wanting to buy T-Mobile. Far from dismissing them entirely, he said in so many words that Sprint is a pile of spectrum, but little else, and T-Mobile is a dynamic, growing, increasingly loved brand that's not going anywhere (and that of course will eventually need more spectrum).

"The T-Mobile brand is here to stay. How that ultimately plays out, [who knows]. But we're a change agent, a maverick … and I think people think that is very important."

Whether helped by such a deal or not, Legere also said that there is "nothing strategic or long term" that T-Mobile can't accomplish to eventually make it the nation's leading carrier.

"Not this year, and not next year," he said, but in good time.

T-Mobile made headlines at CES 2013 for taking on its rivals and making big promises. (The event marked the beginning of Legere's public thrashing of AT&T.)

"We almost didn't come this year, and then we realized, what better place to summarize the year?" said Legere.

T-Mobile did away with two-year contracts; it separated data plans from device prices and began offering monthly financing for devices; it began including texting and data use in more than 100 countries, for no extra fee, as part of its Simple Choice Plans; and it began offering 200MB of free data per month to anyone with a tablet that can access its network.

And people have responded.

During the third quarter of 2013, T-Mobile gained nearly 1 million customers, and during the fourth quarter—its best quarter in eight years—it did 60 percent better, adding 1.6 million new customers. (During the fourth quarter of 2012, it lost more than 800,000 customers.)

On the whole, T-Mobile gained 4.4 million new customers in 2013, said Legere, insisting, "When this many people move to a proposition, thinking changes."

When asked whether something had happened to make him so passionate about wanting to upend the industry, Legere suggested the opportunity was too fantastic—the degree to which subscribers hated their carriers too great—to get it wrong.  

Putting it in other terms, he explained, "The rule in karaoke is, if someone sings and they suck, go next," he said.

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