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T-Mobile US ‘kills’ contracts and sticks the knife deeper in rivals


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Justin Springham

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LIVE FROM CES 2014: Outspoken T-Mobile US boss John Legere went into overdrive at his company’s latest ‘uncarrier’ unveiling here this afternoon, claiming the operator’s new move is designed to end mobile contracts and will “frighten the crap” out of rival carriers. And, naturally, Legere used much of the press event to mock the performance of larger operators AT&T, Sprint and Verizon.

The news itself wasn’t a surprise, having been widely leaked in the last week. From tomorrow, T-Mobile will incentivise consumers to switch to the operator from AT&T, Sprint or Verizon by paying off their early termination fees (ETFs). The offer applies to both individual and family plans and the operator claims the total value of the offer to switch to T-Mobile could be as high as $650 per line.

“ETF’s are another form of phone subsidy. It’s part of the overall industry scam – there is no transparency. I want every customer to have constant, complete choice,” said Legere.

“This is not a ‘programme’. This one is here to stay. It’s going to be the end of contracts. Once we all get through these ETFs, the contract world will go away.”

Legere believes the move will have a huge impact on its future subscription numbers, noting that preliminary numbers from its Q4 performance alone show the operator attracted 1.65 million net additional customers in the period. “This is contract freedom. This will change things completely. 1.65M customers came in Q4 but we’ve only been doing ‘uncarrier’ for 8 months so tonnes are still locked in…. We gained 4.4 million new customers in 2013 – that makes us the fastest growing operator in the US.”

As well as the major improvement in its customer numbers, T-Mobile claims it has made massive strides in rollout of its LTE network in the last year. “A year ago we had no LTE, now T-Mobile is the fastest nationwide LTE network,” said Legere, citing average December download speeds of 17.8 Mb/s (compared to Verizon’s 14.7 Mb/s, AT&T’s 14.3 and Sprint’s 7.9).

This prompted Legere to quip: “I am going to send a ‘cease and desist’ letter to AT&T about them saying their network is the fastest.”

On competitor trashtalk, Legere didn’t hold back. Sprint was described as “a pile of spectrum waiting to be turned into a capability, an impaired brand,” while he referred to its Spark service as “Spanky”.

As for AT&T – the subject of Legere’s strongest ire over the past year – the T-Mobile man commented: “They are a total source of amusement for me, they take my bullshit, they take my bait; dumb move. They talk in corporate speak.”

Poking more fun at the competition, Legere said T-Mobile has drafted a ‘breakup letter’ template for any potential new customers wanting to notify their existing operator of their intention to switch carriers.

Finally, in the Q&A session of the event, Legere addressed long-running speculation that its rival Sprint (owned by Japanese congolomerate SoftBank) could make a bid for the operator. He didn’t rule out the prospect of this acquisition taking place, but claimed that – whatever happens – T-Mobile’s strategy is here to stay: “Whatever we are doing will prevail. We are either going to take over this industry or the others will have to change.”

“We can be standalone but there are options that would provide significant scale. There is nothing strategic and long-term that we can’t do to become the number one operator in the United States.”

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  • Marty

    Legere makes sense. After 18 years with Verizon, I just switched to TM and enjoy the service and attitude. Without a contract, TM realizes that they have to be on their game everyday, not just on the first day.